Govt hikes import duty on gold, silver after PM Modi’s austerity appeal

The Centre has revised customs duty rates on several precious metal imports including gold silver and platinumrelated products in a move aimed at tightening control over nonessential imports and managing foreign exchange pressuresAccording to a notification issued by the Ministry of Finance the revised duty structure came into effect on May 13 Under the new framework gold and silver findings will now attract a customs duty of 5 per cent while platinum findings will face a 54 per cent dutyThe government has also fixed a concessional customs duty rate of 435 per cent on imports of spent catalysts and ash containing precious metals subject to strict compliance conditions and environmental clearancesIn a separate measure the government has raised the overall import duty on gold and silver to 15 per cent from 6 per cent by increasing the social welfare surcharge and agriculture infrastructure and development cess The revised rates are expected to significantly increase the landed cost of precious metals in IndiaGovernment clarifies definition of jewellery findingsThe Finance Ministry also issued detailed definitions of products covered under the revised customs regime to avoid confusion in classification and taxationAs per the notification ldquofindingsrdquo refer to small jewellery components such as hooks clasps clamps catches pins and screw backs used in gold silver and platinum ornamentsIndustry experts believe the revised rates could increase manufacturing costs for jewellers dependent on imported components and specialised precious metal inputsThe government had earlier reduced customs duty on gold to 6 per cent in the 202425 Union Budget to support the domestic gems and jewellery industry and discourage illegal smuggling However the latest revision marks a reversal amid rising economic concerns linked to global geopolitical tensionsDuty concessions tied to strict compliance rulesThe concessional 435 per cent duty on spent catalysts and ash containing precious metals will only be available to importers who comply with the Customs Import of Goods at Concessional Rate of Duty or for Specified End Use Rules 2022Importers must provide an undertaking to customs authorities declaring the percentage of precious metals contained in the imported material and confirm that the goods are meant solely for recovery or recycling purposesThe revised framework also mandates environmental approval from the Ministry of Environment Forest and Climate Change for imports involving recovery and recycling activities Officials said the conditions are intended to regulate the handling of potentially hazardous materials while ensuring that imported waste is processed through authorised channels onlyPM Modi calls for austerity amid West Asia crisisThe customs duty revision comes days after Prime Minister Narendra Modi appealed to citizens to adopt austerity measures in response to the economic impact of the ongoing West Asia crisis and rising global crude oil pricesAddressing a rally in Hyderabad PM Modi urged people to postpone gold purchases for weddings reduce unnecessary foreign travel and cut fuel consumption wherever possible He also encouraged greater use of public transport electric vehicles rail transport and workfromhome practices to conserve foreign exchange reservesIndia is facing pressure from rising import costs linked to the ongoing USIran conflict and disruptions in the Strait of Hormuz a critical shipping route for oil and LPG supplies The country imports nearly 60 per cent of its LPG requirements with a major portion routed through the StraitRising gold prices and import bill add to concernsIndiarsquos gold imports surged more than 24 per cent to a record USD 7198 billion in 202526 despite a decline in import volumes Rising global prices have pushed domestic gold rates sharply higher in recent monthsIn Delhi gold prices climbed to Rs 156800 per 10 grams on Tuesday while silver prices jumped to Rs 277000 per kilogram Meanwhile the Indian rupee weakened to a record low of 9563 against the US dollar amid concerns over inflation the current account deficit and foreign exchange outflows