Gold, silver prices surge 6% as India hikes import duty
What's the story
Gold and silver prices in India surged by over 6% on Wednesday, following the government's decision to raise import duties on the precious metals. The central government has increased the basic customs duty on certain categories of gold and silver imports from 5% to 10%. The total import duty now stands at 15%. The move is aimed at curbing imports, reducing the trade deficit, and supporting the Indian rupee.
Price increase
Gold, silver prices in India
After the import duty hike, gold prices in India surged by over 6% to hit ₹1.62 lakh per 10gm on MCX. Silver prices also witnessed a similar jump, hitting ₹2.95 lakh per kg. The price surge is in line with the new import tax structure introduced by the government to curb imports and support the Indian rupee.
Tax details
New import tax structure
The new import tax structure now includes a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC), taking the total effective import tax to 15%. This is a major increase from the previous 6% duty. The move is expected to reduce demand for gold and silver in India, but could also lead to an increase in smuggling, which had declined after earlier tariff cuts.
Global market
International gold and silver rates
In the international market, gold prices witnessed a slight decline due to uncertainty over the US-Iran war and stronger-than-expected US inflation data. Spot gold price fell by 0.4% to $4,695.99 per ounce while US gold futures for June delivery rose by 0.4% to $4,705.30. Spot silver also saw a marginal increase of 0.2% at $86.71 per ounce in line with global trends.