Context: Gold Import Duty
The Centre doubled the effective import duty on gold and silver imports from ~9.2% to ~18.4% amid West Asia tensions, rising crude oil prices, and concerns over India’s Current Account Deficit (CAD).
Duty Changes
- Basic Customs Duty (BCD): 5% → 10%
- Agriculture Infrastructure and Development Cess (AIDC): 1% → 5%
- Integrated Goods and Services Tax (IGST): 3% unchanged
- Effective import tax: ~9.2% → ~18.4%
Why Duty Increased?
- Reduce Current Account Deficit (CAD)
- Protect foreign exchange reserves and rupee
- Discourage non-essential imports
- Rising crude oil prices may increase import bill
Current Account Deficit (CAD)
- CAD occurs when a country’s imports exceed exports of goods, services, and transfers.
- Higher gold and crude oil imports widen CAD.
Government’s Priority Imports
Foreign exchange resources to be used for:
- Crude oil
- Fertilisers
- Defence needs
- Critical technologies
- Capital goods
Concerns
- May increase gold smuggling
- Jewellery sector employment may be affected
- Gold demand in India is culturally driven
