India slashes gold, silver shipment taxes to 6 percent

2024-07-24 08:24:21

(MENAFN) India has taken a significant step to revitalize its gold and silver markets by slashing import duties on these precious metals from 15percent to 6percent. The move, announced by Finance Minister Nirmala Sitharaman during her budget speech, aims to spur domestic demand and mitigate the challenges posed by smuggling in one of the world's largest bullion markets.

Sitharaman emphasized the government's intention to enhance domestic value addition in gold and precious metal jewelry through this duty reduction. By lowering customs duties on gold and silver, the Indian government seeks to foster a more competitive environment within the domestic market while encouraging formal imports over illicit channels.

While the reduction in import duties is expected to stimulate demand for gold and silver within India, there are potential implications for international markets as well. India's increased appetite for gold, traditionally a major global consumer, could exert upward pressure on international prices, which have already been climbing to record highs earlier this year.

In addition to revising import duties on precious metals, India also made headlines by exempting import duties on 25 critical minerals, including lithium. This strategic move underscores India's efforts to secure vital supplies of lithium, a crucial component used in manufacturing electric vehicle batteries, aligning with the country's push towards sustainable energy solutions.

The Reserve Bank of India (RBI) has also ramped up its gold acquisitions, marking a notable increase in purchases. In June alone, the central bank acquired 9.3 tons of gold, the highest monthly acquisition in nearly two years. This figure significantly surpasses the average monthly purchase of 5.6 tons observed throughout 2024, according to estimates from the World Gold Council (WGC).

The decision to reduce import duties on gold and silver reflects India's strategic economic policies aimed at bolstering domestic sectors while navigating global market dynamics. As India continues to prioritize economic growth and sustainability, these policy adjustments are poised to play a crucial role in shaping both local and international trade in precious metals and critical minerals.

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