The government has proposed to increase import duty on gold and other precious metals to 12.5 percent. This will lead to expensive gold and ornaments in the domestic market. In her budget speech, Finance Minister Nirmala Sitharaman proposed to increase customs duty on gold and other precious metals from 10 to 12.5 percent.
The government has proposed this at a time when the domestic jewellery industry was demanding reduction in import duty. In the past, the Commerce Ministry has also recommended reduction in import duty. In the financial year 2018-19, gold imports reduced by 3 percent to $ 32.8 billion. Decrease in gold imports helps curb the current account deficit (CAD).
In the financial year 2017-18, the total value of precious metals stood at $ 33.7 billion. It was 27.5 billion dollars in 2016-17 and $ 31.8 billion in 2015-16. In terms of quantity, the country imported 982 tonnes of gold in the last financial year. Gold imports in the fiscal year 2017-18, 2016-17 and 2015-16 were 955 tonnes, 778 tonnes and 968 tonnes respectively. India is one of the largest gold importers in the world. The import is mainly done to meet the needs of the domestic jewellery industry.