India weighs hike in import duty on steel and gold to support rupee

The government is considering imposition of raising import duty on steel and gold in a bid to shore up its current account balances and shore up the rupee that has fallen to historic lows.

The steel ministry has proposed to increase the effective import duty on some steel products to 15 per cent from current rates ranging from 5 per cent to 12.5 per cent, reports quoting official sources said.
The commerce ministry is also proposed to hike the import duty on gold to 12-13 per cent from 10 per cent to control the widening current account deficit, a move that will hit jewellery exports and pull down domestic demand.
With margins of jewellery exporters already pressed by the 10 per cent import duty, the proposed duty hike will further handicap Indian jewellery manufacturers as the duty hike comes on top of a fallen rupee that has depreciated about 14 per cent since January.
Besides, the government is reported to be considering some policy measures to restrict gold imports. India is the world`s second biggest gold buyer, and its imports in August rose more than 90 per cent to $3.64 billion.
There is no confirmation from the steel and commerce ministries and there is no certainty that the proposed duty would be imposed.
India had earlier slapped countervailing duties on steel after India became a net steel importer in the three months ended June - the first time in two years - with foreign supplies reaching 2.1 million tonnes, up 15 per cent from a year earlier, according to official data.
In the 2017-18 financial year to end-March, the country imported 8.4 million tonnes of steel, 45 per cent of which came from Japan and South Korea, with which India has free trade agreements.
The proposed duties may apply to imports from other steel suppliers such as China, South Africa, Malaysia, Russia and Indonesia.
Apart from steel, India is considering raising import duties on some farm commodities, potentially for a few months, although it is wary of the risks of retaliation, said a senior government official with knowledge of inter-ministerial deliberations on proposed restrictions.
The government is also looking at curbs on imports of gold and high-end electronic items, a trade ministry source said last week.