I’ve been writing the last few months about changes to India’s gold import rules.
Some of these shifts have already happened–such as the government allowing a greater number of banks to import bullion.
But more changes are expected. With one of the big questions being whether regulators will reduce import taxes on gold. A step that would likely spur increased buying within the country.
The push for such a reduction has been strong from investors and the Indian jewelry-making lobby. And last week another unexpected and high-profile player joined the call for lower import duties.
The Indian government itself.
Local press reports that the federal directorate of revenue intelligence (DRI) has formally requested a reduction in gold import duties. DRI is the intelligence unit of the national customs department.
Reports suggest that DRI has submitted a written recommendation to India’s finance ministry. Asking that taxes on incoming gold be reduced, in order to combat illegal shipments that have become common under the higher-tax regime.
Sources from DRI were quoted as saying that the agency “feels that [gold duties] should come down so that the smuggling can be contained.”
This request represents one of the highest-level calls yet for a change in India’s gold import regime. And the first time that such pressure has come internally from within the government.
Speculation is that a change in gold import duties and other rules on bullion could come soon. Perhaps as part of India’s new budget, which is due to be released on July 10.
If we do get a relaxation of import rules, it could be a major shot in the arm for gold. Helping to shore up India’s imports, which have fallen as much as 60% the last few months as compared to year-ago levels.
That would be a boon for the gold price. Especially given the mini-rally already seen in the metal over the last few weeks.