India Hikes Gold Tariff from 6% to 15%

(IDEX Online) - India has more than doubled tariffs on gold and silver - up from 6% to 15% - in a move aimed at easing pressure on its foreign exchange reserves.

The increase took effect on 13 May, just three days after Prime Minister Narendra Modi called on people to stop buying gold for a year, as part of a broader austerity program.

The Gem & Jewellery Export Promotion Council (GJEPC) warned that increased tariffs would result in higher prices rather than lower imports.

Jewellery retailers believe limiting the volumes imported, rather than raising duties, would be more effective.

Stocks in Kalyan Jewellers and Thangamayil Jewellery fell by around 6% on the day in response to the news.

"As expected, the government has raised duties to curb the current account deficit. However, this could affect demand, as gold and silver prices were already elevated," said Surendra Mehta, national secretary of the India Bullion and Jewellers Association.

India is the world's second biggest gold buyer after China. The new 15% tariff on gold and silver imports comprises a 10% basic customs duty and a 5% Agriculture Infrastructure and Development Cess (AIDC).

Screengrab shows Prime Minister Narendra Modi urging people to stop buying gold.