Record demand for gold despite high prices may increase the odds that the government will raise import duty on the metal in the forthcoming budget, a top official from industry body World Gold Council (WGC) said on Thursday.
The official added, though, that an increase in duty would not affect demand for gold jewellery, bars and coins.
The government could raise the import duty on gold in the budget for FY12 since high prices did not deter consumers from making a record purchase of 745.7 tonne jewellery last year,said Ajay Mitra, managing director, Middle East & India , WGC. The high demand resulted in the country importing 918 tonne, the highest in a year so far. However, I dont see demand being hit since the duty calculated on a per gram basis works out to just Rs 300.
At the current import duty of Rs 30,900 on one kg of gold, the government would have raked in Rs 2,836.6 crore based on WGCs import estimate for 2010. The jump in demand amid rising prices may act as an incentive for the government to raise the duty, it is felt by the UK-based WGC, which is funded by the worlds leading mine companies.
Indian consumers bought a total of 963.1 tonne gold valued at Rs 1.73 lakh crore. This was a growth of 66% from what they purchased in 2009. ETIG data showed that the average price of gold in Mumbai rose by 20% to Rs 18,488 a tola.