Finance Minister P Chidambaram has found out that only moral suasion is not working to bring down the gold imports. So the government has once again intervened. This time round not only customs duty, but excise duty has also been raised.
Now, the import tax on the metal stands at an unprecedented 10 percent and excise duty at 9 percent.
Apart from duty increases, the authorities have also taken other steps too. Here’s a timeline of key steps in relation to gold in 2013:
Jan 21: The government raises its import duty on gold by 2 percentage points to 6 percent. Industry officials say they expect only a moderate drop in demand.
Jan 22: India targets raw gold in its second duty hike that week. The government more than doubles its duties on gold alloy.
Jan 30: The government says it does not plan additional taxes or curbs on imports of gold as it waits to see the impact of recent tax hikes.
Feb 6: The RBI says it could limit gold imports by banks in “extreme circumstances” and puts forward measures to help rein in purchases.
Feb 28: The government keeps the gold import duty unchanged in the annual budget even as industry experts say they think the duty will be raised.
April : Gold prices in India fall sharply to about 25,500 rupees/10 grams (around $425/10 grams). Such levels were not seen in the last 18 months. There is global selling as Cyprus’ plan to sell bullion reserves, fears of the U.S. Fed ending its stimulus, worries of central bank sales and investors dumping gold push prices down.
May 3: The RBI proposes to restrict gold imports on a consignment basis by banks only to meet the genuine needs of jewellery exporters, adding that the guidelines will be issued by May 31.
May 13: Lower prices mean more buying. Data show that India’s gold and silver imports shot up 138 percent on year in April as customers took advantage of lower prices. The data shocks the government. The RBI steps in, brings into effect previously announced restrictions on banks importing gold.
May 20: Chidambaram says India will take more steps if necessary to curb gold imports.
May 27: The RBI says banks will not be allowed to give loans against units of gold exchange-traded funds and gold mutual funds.
June 3: India imported around 162 tonnes of gold in May, a finance ministry official says. This was much more than expected.
June 4: The RBI takes tougher measures, saying domestic jewellers can only buy gold on a cash basis. By doing this, the central bank makes the overseas purchase of gold a cash and carry business. Shares of jewellery makers fall.
June 5: Another gold import duty hike. The government increases the import duty on gold to 8 percent from 6 percent. A government official says the next day that it might take more steps to curb gold inflows.
June 21: Reliance Capital abruptly halts gold sales and investments in its gold-backed funds, saying it is ”committed to support all policy objectives of the government and the RBI”.
June 24: India’s biggest jewellers’ association – All India Gems and Jewellery Trade Federation – asks members to stop selling gold bars and coins, which makes up about 35 percent of their business.
June 25: The RBI tells rural regional banks that they can no longer provide loans against gold jewellery and coins.
June 27: The RBI rules out any credit transactions for gold imports unless they are intended to make jewellery for export.
With inputs from Reuters