7 April 2016
India Increases Import Tariff Value on Gold and Silver
India has raised the import tariff value on gold to US$399 per 10 grams and on silver to US$495 per kilogram, in line with current global market trends. This comes on top of the already high import duty on gold, which has remained at 10% since 2013. Further, the government has announced a third round of the Sovereign Gold Bonds (SGBs) scheme. The bonds are sold through banks, the Stock Holding Corporation of India Ltd. (SHCIL), and designated Post Offices.
The import tariff value on gold and silver was raised by the Central Board of Excise and Customs on 29 February 2016. This value determines the base price upon which import duty is imposed.
The window of application for the third offering of the SBGs scheme was 8 – 14 March. The SGBs will be issued on 29 March 2016 by the Reserve Bank of India on behalf of the Indian government. These bonds are government securities denominated in gold grams and are substitutes for holding physical gold. They can be redeemed in cash after eight years at the then prevailing market price of gold.
India is the world’s largest consumer of gold, and the country imports about 900 tons of gold every year. India’s gold imports have continued to grow despite the high import duty; imports for January 2016 were US $2.9 billion, which was an increase of 85 per cent from the same month in 2015.
India’s Prime Minister Narendra Modi announced the SGBs scheme on 5 November 2015 to control the high demand for gold imports. Two rounds of this offering have since closed, and investments of about US 157.47 million (INR 10.5 billion) worth of gold have been mobilised.