'Increase in import duty on gold, will not have major impact on demand'

Chennai, July 1

The increase in customs duty on gold will not have any major impact on the yellow metal's demand or the price, said a top official of Madras Jewelers and Diamond Merchants Association.

Nor the duty hike will result in any increased smuggling activity of the yellow metal, he added.

On Thursday, the central government increased the customs duty on gold from 10.75 per cent to 15 per cent to curb gold imports.

The government said, there has been a sudden surge of gold imports.

In May, a total of 107 ton of gold was imported and the import volume last month was also significant, the government said.

"The surge in gold imports is putting pressure on current account deficit. To curb import of gold, customs duty has been increased from present 10.75 per cent to 15 per cent," the government reasoned.

Speaking to IANS Jayantilal Challani, President, Madras Jewelers and Diamond Merchants Association and a partner in Challani Jewelry Mart said the duty hike will not have any major impact on the demand or the price as the government has scrapped the surcharge.

He said the duty hike may not also result in any increased smuggling activity as it will go on whether the duty is low or high.

India is the second largest importer of gold.