India hikes import tax on gold by 50% to stem demand
NEW DELHI (AFP) - India, the world's top gold consumer, on Monday hiked the import duty on the precious metal by 50 per cent in an effort to reduce demand and help stem the country's ballooning current account deficit.
Gold purchases are one of the biggest contributors to India's current account deficit - the broadest measure of trade - which hit a record US$22.3 billion (S$27.4 billion), or 5.4 per cent of GDP, in the July-September quarter, as imports outpaced exports.
The government said the rise in the import duty on gold to six per cent from four per cent would take effect immediately. Last year it doubled the duty on gold to four per cent.
"The duties will be reviewed after some time if there is a moderation in the quantity of gold that is imported into the country," Economic Affairs Secretary Arvind Mayaram told reporters.