http://www.bloomberg.com/news/2012-...mport-tax-for-second-time-prices-drop-1-.html
Gov trying to slow peeps roll...
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India, the world’s biggest bullion buyer, increased the tax on gold imports for the second time this year after record purchases widened the current-account deficit. Gold fell.
The government will tax gold bars and coins and platinum at 4 percent, Pranab Mukherjee, finance minister, said in his budget speech for the year starting April 1. That’s up from 2 percent set in January. There was no change on the silver tax.
India doubled the tax on gold and silver on Jan. 17 by imposing a levy on imports as a percentage of the price, compared with the previous system of tax by weight. Global bullion prices rallied for an 11th year in 2011 as purchases by India peaked at 969 metric tons. Futures in India gained 32 percent last year, exceeding the 10 percent advance in global prices, as the currency slumped to a record low.
“The Indian market will wait for lower prices and there is also the risk that this duty hike will lead to increased smuggling,” Edel Tully, an analyst at UBS AG in London, said by e-mail today, in response to questions from Bloomberg News. “Today’s duty increase will dampen Indian demand.”
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Silver, the poor man's gold, has turned out to be the winner in India's budgetary excise duty cuts by escaping the attention of the Finance Minister. Investors in India are keen to push silver above the recent channel high with traders insisting that it will be more than speculation that will drive demand for the white metal.
"Silver has clearly been exempted for a reason,'' said Prithviraj Kothari, president of the Bombay Bullion Association. ``Out of $50 billion worth of imports of precious metals into India, silver imports were just $4 billion, while that for gold was the other $46 billion,'' he said.
On Friday, India's Finance Minister exempted branded silver jewellery from excise duty. Silver coins of purity 99.9% and above were also exempted from excise duty. However, the excise duty on refined gold was doubled from 1.5% to 3%.
Kothari was of the opinion that silver coins and silver bars, called `chausar' in the local lingo and among bullion traders across the country, would soon sell like hot cakes. "There is not much demand for silver jewellery among Indian investors. Most go for high value silver coins or for a 1 kilo silver bar. The latter is expected to fly off the shelves now and investor interest would surely be pushed higher as a consequence of the double whammy on gold in the budget,'' he added.
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I wonder if this is a case, not of attempting to manipulate the gold price, but of simply attempting to raise tax revenues in a country ranked 95th in world for corruption.
And hey, if India imports less, thats more for the rest of us
With the Indian government stating that it would delay the implementation of hiking the excise duty on non-branded gold jewellery, the bullion strike in India has been officially called off. Jewellers in Mumbai and several parts of the country were back to their stores Monday afternoon, expecting a revival in demand.
The strike by jewellers and retailers began on March 17, immediately after the Union Budget, to protest the government's decision to impose excise duty on non-branded jewellery and doubling of the import duty on gold to 4%. Market estimates have placed the loss at a staggering $2.1 billion.
Bachhraj Bamalwa, chairman of the All India Gems and Jewellery Trade Federation which had given the call to strike, said the government had assured that no jeweller would be forced to register to pay excise duty, and that no coercive action would be taken.
Though some retailers and traders staged a protest in New Delhi on Monday morning, traders in Mumbai and other parts of the country opened their stores late afternoon as the news spread.
NO ROLLBACK
Slowly but surely, the Indian government has begun to bow to the demands of the bullion traders. ...
Today's international gold market rate is increasing day by day. It's becoming quite impossible to by gold for middle class people.
... It's becoming quite impossible to by gold for middle class people.
Gold priced in Nepalese rupees hit a new record high per troy ounce earlier this month, at 56,000 Nepalese rupees per tola. After neighbouring India recently announced a rise in its gold import taxes from 2 to 4%, the Nepalese government had no choice but to raise its own gold import taxes in response, in order to avoid smuggling activities at its borders. ... Sales of gold jewellery dropped in response. However, continuing weakness in the Indian and Nepalese rupees is helping to sustain high (local) prices for precious metals. The short-term outlook for the Indian economy is gloomy, as traders continue to desert emerging market assets in the face of growing deflation fears.
Last week the Indian government met gold and jewellery traders' demands by reconsidering its plans to impose a new purchase tax on this sector. The Indian Ministry of Finance intended to impose a tax on registered as well as unregistered trademark products, but decided to drop this idea in the face of traders' vehement protests.
However, increased import duties on gold and silver will remain. ...
When the fed finally raises interest rates, which it may be forced to do by the market at some point, gold and silver will begin an exponential rise. Better get on board now. Gold will become so dear that buying an ounce a year may become nearly impossible.
http://in.reuters.com/article/2013/01/21/markets-india-forex-idINL4N0AQ3P320130121Indian rupee falls on sustained oil demand; govt raises gold import duty
MUMBAI, Jan 21 (Reuters) - The Indian rupee fell on Monday, retreating from a two-and-a-half-month high hit earlier in the session and snapping two sessions of gains, due to sustained dollar demand from oil refiners.
The dollar demand from oil refiners looking to meet payment obligations offset purchases of the local currency by foreign funds in a session with thin trading volumes because of a U.S. public holiday.
However, the rupee recovered some losses in late trade after a finance ministry official said that import duty on gold and platinum has been raised to 6 percent from 4 percent.
Gold imports constitute a key demand for dollars in the domestic currency market after oil.
A global risk-on environment, expectations of interest rate cuts from Reserve Bank of India and the government's recent fiscal consolidation steps have spurred gains in domestic shares that have attracted foreign flows.
Inflows into Indian stocks are already at $2.45 billion so far in 2013, coming on the back of sustained capital flows of over $24 billion in the previous year.
However, the country's fiscal and current account deficits will likely continue to be a drag on the currency.
"The fundamental position on the current account deficit will not come down. Oil and gold importer-related demand will keep the dollar bid with the rupee to weaken to 54.80 levels in the run-up to the budget," said Param Sarma, chief executive at NSP Forex.
The partially convertible rupee closed at 53.765/775 per dollar, weaker than its 53.71/72 close on Friday. It rose to 53.63 in session, its highest level since Nov. 2.
Analysts, however, expect the rupee to be supported this week, with shares buoyant because of improving corporate earnings, while the government's measure to allow fuel retailers to increase diesel prices gradually has also shored up confidence in domestic markets.
Moody's, in a report dated Jan. 17, reiterated its "stable" outlook on India's ratings, citing the country's potential economic growth, robust domestic savings rate and a dynamic private sector.
The affirmation assuages some concerns at a time when both the other two global rating agencies--Standard & Poor's and Fitch--have a negative watch on the country's rating due to India's fiscal and current account deficits among other factors.
In the offshore non-deliverable forwards, the one-month contract was at 54.05, while the three-month was at 54.59.
In the currency futures market, the most-traded near-month dollar/rupee contracts on the National Stock Exchange, the MCX-SX and the United Stock Exchange all closed at around 53.9725 with a total traded volume of $5.7 billion. (Editing by Gopakumar Warrier)
Last year's rise in import duty only had a temporary impact on demand, and some analysts said the latest move would have little effect.
"The government's revenue will increase, but imports won't diminish," said Mohit Kamboj, president of the Bombay Bullion Association.
ABOUT a quarter of the gold flowing into India is coming through irregular channels given the "anti-gold" stance adopted by the government of one of the world’s leading gold markets, Thomson Reuters GFMS metal analytics global head Philip Klapwijk said on Monday.
"The government's revenue will increase, but imports won't diminish," said Mohit Kamboj, president of the Bombay Bullion Association.
ABOUT a quarter of the gold flowing into India is coming through irregular channels given the "anti-gold" stance adopted by the government of one of the world’s leading gold markets, Thomson Reuters GFMS metal analytics global head Philip Klapwijk said on Monday.
The Reserve Bank of India could limit gold imports by banks in "extreme circumstances," the bank said on Wednesday as it put forward measures to help the world's biggest consumer of gold rein in purchases and battle a record-high current account deficit.
India, which imported about 750 tonnes of gold last year with 60 percent of that through banks, has already increased the import duty on gold, which now stands at 6 percent.
But a record high current account deficit of 5.4 percent of GDP in the September quarter has raised concern at the central bank, prompting it to link further monetary policy easing to a lower current account deficit (CAD).
"If the CAD remains sustainably high -- say, in 5.5-6 percent range, for the next three or four quarters, then it might be a case of an extreme situation," a senior official with direct knowledge of the matter told Reuters.
The RBI said it would also consider introducing gold-linked financial instruments to divert savings of inflation-wary Indians from gold bars and coins into bonds, it said in a report published on Wednesday.
The recommendations now go to government for review and after its feedback, the RBI should announce new restrictions and products to curb gold import demand in the next few months.
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"The Indian government is set to unveil its annual budget for the upcoming 2023-24 fiscal year (April-23-March-24) on 1st February," said Metals Focus in its report Monday. "Under normal circumstances, any changes in the customs or import duty also tend to be revealed at this time."
A lower import duty would lower the price of gold in India and increase demand, said government and industry officials. "The government is aware of problems created by the higher duty structure and they will be fixed soon," Reuters quoted one government official.
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The Union Budget 2023 presented by Finance Minister Nirmala Sitharaman has brought about significant changes to the import duties on various goods. While the import duty on diamond seeds has been reduced, the customs duty on gold, silver, and platinum has been hiked to 10 per cent. ...
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The increased customs duty on gold and platinum bars and articles made from them will lead to a rise in the prices of these precious metals. Similarly, the import duties on silver bars, strings, and other items have also been raised to match those of gold and platinum, thereby encouraging domestic production.
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The basic customs duty on silver was raised to 10% from 7.5% ...
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Local silver prices jumped by up to 2% after the duty changes.
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The jewellery industry was expecting a reduction on the import duty on gold as smugglers have been offering hefty discounts as illicit imports boom after COVID-19, denting the market share of banks and refiners. However, the government did not cut its import tax on gold.
Physical gold demand in India ticked up this week, as jewellers resumed purchases after staying away for a couple of weeks hoping for an import duty cut in the government budget amid the wedding season.
"Jewellers were not buying for few weeks anticipating government will cut import duty in the budget. As there wasn't any change in the duty structure, they have started buying small quantity," said Harshad Ajmera, a gold wholesaler in Kolkata.
India did not slash import duty on gold in its annual budget presented on Feb. 1, but raised the import duty on silver.
Bullion industry was seeking a reduction in the duty as gold refiners have nearly stopped imports of gold dore, a semi-pure alloy, as grey market operators offer hefty discounts to market rates and cut into their slender margins.
But retail demand was still muted as consumers were struggling to digest record high prices, said a Mumbai-based dealer with a private bullion importing bank.
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India’s move to favour gold imports from the UAE by charging an import duty that is one percentage point less than imports from other countries is not bearing fruit: only about two tonnes of the yellow metal were imported under their free trade agreement in the seven months to December.
In fact, instead of growing, gold imports after the India-UAE Comprehensive Economic Partnership Agreement (CEPA) have reported a double-digit decline in the April-November period in value terms.
Some of this is put down by government officials to importers gaming the system and importing gold disguised as platinum alloy. The India-UAE free trade pact, which came into effect on 1 May, allowed for the concessional tariff on gold for up to 120 tonnes in the first year (80 tonnes till December). Officials attributed the tepid response under CEPA to a spike in gold import duty on 30 June 2022, which they say may be resulting in gold coming in from informal channels.
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India's January gold imports plunged 76% from a year earlier to a 32-month low on subdued demand after domestic prices rallied to record highs and as jewellers postponed purchases, hoping for a reduction in import duty, a government source said.
Lower imports by the world's second-biggest bullion consumer could weigh on benchmark gold prices , but the fall may help in bringing down India's trade deficit and support the ailing rupee .
The country imported 11 tonnes of gold in January, compared with 45 tonnes a year earlier, the source said on condition of anonymity, as he is not authorised to speak to the media.
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Jewellers and bullion dealers hardly bought any bullion in the second half of January, as they had expected the government would cut the import duty on gold in its annual budget to curb a rise in smuggling, said a New-Delhi based bullion dealer with a private bank.
India did not slash the import duty on gold in its budget presented on Feb. 1 but raised the import duty on silver.
Local gold prices have fallen nearly 5% from the all-time high and this has helped attract retail consumers, the New-Delhi-based dealer said.
"In February, imports would improve. Bullion dealers and jewellers need to build stocks for wedding season," he said.
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