Finance Minister raises duty on gold imports to 4 per cent

India union Finance Minister Pranab Mukherjee has announced his decision to increase the duty on gold imports to 4 per cent in the country with effect from the next financial year. The doubles of he duty from 2 per cent comes after previous increase in January. The move indicates that government is increasing concerned over the import of the metal that worsens its current account. Mukherjee said that the growth of 50 per cent in import of gold and other metals has become the primary reason for the worsening of the current account position of the government during the first three quarters of this year. He pointed out that he as to take steps to work on the steps that are already taken to control the situation. India, which is the largest consumer of the shiny metal, is estimated to import a record $58 billion worth of gold in the 2011-12 fiscal year, according to the Prime Minister's Economic Advisory Council The government has said in January that it will levy customs duty at the rate of 2% on the value instead of a flat rate of Rs. 300 per 10 gram for gold. On the other hand, Silver began attracting a 6% duty, instead of a specific duty of Rs. 1,500 a kg earlier. The changes in import duty norms resulted in customs duty of Rs. 550 per 10 gram for gold and Rs 3,163 for silver. The duties on the metals will increase if their prices rise in the international markets as the duties are linked to their value. Prithviraj Kothari, the President of the Bombay Bullion Association warned that the gold import into the country will fall by 50 per cent in the next six months and this could open illegal channels for importing the metal into the country.