Import duty hike on gold, precious metals aimed at safeguarding macro stability, forex reserves: Sources
ADVERTISEMENT
The increase in customs duty on imports of gold, and precious metals announced by the government is aimed at safeguarding macroeconomic stability and conserving foreign exchange reserves, said sources.
“The measures have been taken also to moderate non-essential imports during a period of heightened global uncertainty arising from the ongoing West Asia crisis.
Import duty on gold and silver has been increased from 6% to 15% and the import duty on platinum has been increased from 6.4% to 15.4%. Consequential changes have also been made to other items such as gold/silver dore, coins, findings, etc,” government sources pointed out. The measure is also aligned with the broader national economic discipline emphasised by Prime Minister Narendra Modi in the context of the evolving global situation, they said.
“The current geopolitical situation has created significant volatility in global crude oil markets and international shipping routes. As a large importer of crude oil, India remains vulnerable to elevated energy prices and supply-side disruptions, which can increase the import bill, exert pressure on inflation, and the Current Account Deficit (CAD),” sources pointed out.
“In such circumstances, prudent management of the country’s external sector becomes essential. Historically, customs duty adjustments have been used as one of several policy instruments to support macro-economic stability and effectively manage CAD-related pressures during periods of global volatility,” sources said.
Sources said there is a need to prioritise forex reserves towards essential imports such as crude oil, fertilisers, industrial raw materials, defence requirements, critical technologies, and capital goods. “These imports directly support economic activity, food security, infrastructure, manufacturing, exports, and national security.
In contrast, precious metals, while culturally and financially significant, are predominantly consumption and investment driven in nature. Such imports involve substantial outflow of foreign exchange,” government sources said.
They pointed out that precious metals occupy a unique position in the import basket because they involve significant foreign exchange outflows while being relatively less linked to productive industrial activity compared to sectors such as energy, manufacturing inputs, infrastructure, or technology.
“In periods of heightened geopolitical and commodity-market volatility, policymakers often seek to prioritise external resources towards areas with higher strategic and economic multiplier effects. Therefore, during periods of external stress, measured moderation of discretionary imports may contribute significantly to overall macro-economic stability and prudent external-sector management,” they said.