Inorder to check the burgeoning current account deficit, halt depreciation of the rupee and partly make up the shortfall in revenue collections, the Central Government tweaked the duty structure on precious metals to mop up an additional Rs.600 crore during the last quarter of the current fiscal.
Accordingly, while diamonds now attract an import duty of 2 per cent,the import duty on gold has been revised to 2 per cent of the value from the earlier fixed rate of Rs.300 per 10 grams. Likewise, the import duty on silver now stands pegged at 6 per cent, instead of the earlier fixed rate of Rs.1,500 a kg.
In 2010, the country's gold imports stood at 958 tonnes while in the first half of 2011, imports totalled 553 tonnes, even in the wake of hardening prices globally.
During 2011, gold crossed the Rs.29,000 per 10 gram level to a historic high of Rs.29,155 per 10 grams in December in view of the marriage season.
The fact remains that apart from the marriage requirements, the demand for gold and silver were more owing to investment purposes as a hedge against high inflation and weak equity markets.
