India's ravenous gold appetite clouts next-door gold imports

MUMBAI (Scrap Monster) : The Indian government first raised the import duty from 2% to 6% to curtail demand. In June, it was further raised to 8%. The Reserve Bank of India (RBI) tightened the norms for importers. The government had also stopped trading of gold in Special Economic Zones. Despite the series of tight controls on gold imports by the Indian government and RBI, the July gold imports by the country have gone higher. With more Indians trying to bring gold through neighboring countries, the next-door countries are forced to take measures to curb their own gold imports.

Pakistan's Economic Coordination Committee (ECC) of Cabinet announced a temporary ban on gold imports by the country for a period of one month on the back of surging import volumes and rising acts of smuggling to neighboring India. The gold imports by Pakistan during the initial six-month period in 2013 shot up by almost 386% over previous year.

Srilanka imposed a 10% import duty on gold in a bid to seal the leakages across the border. The country’s gold imports have surged by 46.7% to $110 million during the first four months (Jan to April) of the year. Srilanka’s April gold imports alone touched $50 million.

In July, Nepal too hiked the gold import duty from Nepalese Rupees 3,000 per 10 grams to Nepalese Rupees 3,600 in an attempt to curb the ballooning gold imports by the country.

There have been several attempts to transport gold to India across the border. About 35 kilograms of gold was seized at the Indo-Nepal border last month. Gold weighing nearly 300 kilograms destined to India have been seized from Bangladesh’s airport during past seven months. The recent measures by various neighboring countries are expected to put breaks on the acts of gold smuggling across the border.