The government today announced an increase in import duty on gold from the existing 6 per cent to 8 per cent as rising gold imports pushed up trade deficit to $17 billion in the first month of the current financial year alone.
Rising imports also added to the country's current account deficit (CAD), which has shot up to 6.7 per cent of GDP.
This is the second time the government hiked gold import duty in six months after gold imports touched an alarming 162 tonnes in May.
India is estimated to have imported gold worth a staggering $15 billion in April and May this year.
The finance ministry's decision to hike import duty on gold follows measures announced by the RBI on Tuesday to curb bulk imports of gold.
The Reserve Bank of India yesterday extended the restrictions on gold import to other agencies in addition to banks, a moved aimed at curtailing demand for the precious metal for domestic use amid widening current account deficit.
A firm trend in global gold prices has pushed up gold prices in India to levels above Rs27,330 per 10 gm in the futures trade on Wednesday.
A meeting of the Financial Stability Development Council (FSDC) headed by finance minister P Chidambaram and attended by all regulators, including RBI governor D Subbarao, on Monday discussed the issue of surging gold imports among other things.