India is now caught in a web of curbs and counter-curbs born out of the plan to restrict gold imports it is safe to say that our government does not know what to do with gold. On Tuesday, the import duty on gold jewellery was increased to 15% after complaints from the domestic industry that it could not deal with cheap imports from South-East Asia.
This comes after import duties on gold bullion were raised to 10% this year in three steps. The move was expected to slow the country’s demand for the yellow metal, partly blamed for a spike in its current account deficit. It is also safe to say that India is now caught in a web of curbs and counter-curbs born out of the plan to restrict these imports. A large increase in the cost of gold bullion was bound to make life hard for the jewellery industry. But in the bargain, this industry is now, effectively, under a protectionist umbrella.
So what began as an effort to narrow a deficit may end up making a competitive industry uncompetitive.