India increases import duty on gold by 2%, silver 6 % in 2012

Indian government has raised the import duty on Gold and Silver on Tuesday. Import duty on Gold has been increased to 2% of value from the earlier flat Rs. 300/ 10 gm and that of silver to 6 % of value from Rs. 1,500/ kg. The government has raised the import duty because of soaring demand for gold and silver in India, the world's biggest consumer of bullion. The duty changes could nearly double duties on both gold and silver. Prices of gold on the MCX advanced after the duty hike with the February gold contract gaining as much as 1% to Rs. 27,760 while silver for March delivery increased more than 2% at Rs. 53,361/kg. Earlier in 2009-10, the Indian government had increased import duty on gold bars from Rs. 100/10gm to Rs.200/10gm, while duty on other forms of Gold(excluding jewellery) was increased from Rs. 250/10gm to Rs. 500/10gm and silver was increased from Rs.500/kg to Rs. 1,000/kg. The industry reaction to import duty hike was mixed with manufacturers arguing that the hike could have been avoided while traders and importers felt the move could have little impact on consumption in India.

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