India hikes import duty on precious metals to 10% to contain CAD

The government today hiked import duty on gold, silver and platinum to 10 per cent in a bid to curb excessive imports of precious metals and help save precious foreign exchange.

The measure will also help the government to raise an additional Rs4,830 crore in customs duty in the remaining part of the fiscal.

"The revenue implications of these changes are estimated at Rs4,830 crore for the remaining part of the financial year at current levels of import", the finance ministry stated in a notification issued today.

The import duty has thus been brought to a uniform rate of 10 per cent against the earlier levels of 8 per cent on gold and platinum and 6 per cent on silver.

Finance minister P Chidambaram had, yesterday, said that the government was looking at a series of measurers aimed at containing the slide in the value of the rupee and reducing the widening current account deficit (CAD).

Besides duty hikes on import of precious metals, Chidambaram said he would also announce measures to curb import of crude oil as also some non-essential items.

The finance minister had also said that the government would table notifications effecting changes in the duty rates in Parliament today.

The government will simultaneously also announce measures to improve flows of foreign capital into the country, including easier overseas borrowing norms, to raise an additional $11 billion this fiscal.

These measures are expected to help ease the pressure on the rupee and contain CAD at $70 billion or 3.7 per cent of GDP during the current fiscal.

While India's current account deficit is currently around 4.8 per cent of its GDP, the rupee, which is on its longest losing streak, is ruling around its record lows of 61.80 a dollar.