BIG Blow to Smugglers as Gold and Silver Prices Drop After Proposed Import Duty Cut (Image Source: iStockphoto)
Gold and silver prices in the domestic market fell sharply on Tuesday after the finance minister proposed a significant reduction in import duty on these precious metals, cutting it from 15 per cent to 6 per cent.
Impact of Reduction in Import Duty on Precious Metals
The reduction in import duty is expected to have a significant impact on the gold and silver market. Lowering the cost of importing these precious metals will likely increase the supply, potentially leading to a drop in prices. This change could also stimulate demand for jewellery in the domestic market as the affordability of gold and silver increases.
How it is Bad News For Smugglers?
With reduced import duties, the attractiveness of smuggling gold and silver into the country diminishes, posing a challenge to illegal activities in the bullion market.
Gold Price in Mumbai
In Mumbai’s bullion market, the price of gold witnessed a significant drop to Rs 69,100 per 10 grams from Rs 72,750 on Monday, representing a decrease of nearly Rs 4,000 or approximately 5 per cent.
Silver Price
Silver prices also experienced a decline, trading at Rs 85,400 per kilogram compared to Rs 88,300 on Monday, showing a decrease of about Rs 3,000 or 3 per cent.
Bullion Price on MCX
Prices on the Multi Commodity Exchange (MCX) reflected this downward trend, indicating a shift in the overall market dynamics.
What Expert Said?
In an interview with Times of India, Vipul Shah, chairman of the Gem & Jewellery Export Promotion Council, highlighted that the proposed reduction in import duty could potentially boost domestic value addition in jewellery crafted from precious metals. This move could also release around Rs 1,000 crore that was previously tied up in duty payments, providing jewellers with increased working capital.
Insight
It’s important to consider the potential long-term effects of reducing import duties on gold and silver. While it may initially lead to lower prices and increased demand, there could be implications for local producers and the overall economy. Additionally, monitoring the impact on smuggling activities will be crucial to maintaining a fair and competitive market.
