The Indian government has raised the import duty on semi-pure gold doré bars to 8.75 percent from 8.0 percent, it said in its annual budget this morning.
But finance minister Arun Jaitley maintained the duty on refined gold at 10 percent, dashing the hopes of many consumers and sellers in India who had been expecting a decrease.
Many consumers had been delaying purchases in anticipation of lower rates, extending the discounts on refined material up to $30-$40 per ounce on the London spot price and even $50 in some cases.
Jaitley also raised the excise duty on semi-pure material to 9.5 percent from 9.0 percent.
While the costs have now increased, importing unwrought material, refining it and selling it into the market is still marginally profitable for some of the cheaper manufacturers in India. Still, the increase in duty is likely to threaten some operations.
When taking into account the increase to the excise duty, the incentive for importing unwrought gold amounts to just 0.5 percent although those operating in the country’s excise-free zones will enjoy a 1.25-percent margin on refined bullion.
New Delhi has also introduced a one-percent excise duty on all gold jewellery sold in the country.
(Editing by Mark Shaw)