The government of India announced over the weekend that they would finally reduce long-held tariffs on gold and silver imports. As of November 1, the new rates are $391 per 10 grams of gold and $551 per kilogram of silver. The reduction is expected to lead to a rise in purchasing of the metal.
This comes as a bit of a surprise as the Finance Minister of India recently announced that there were no plans to cut tariffs on gold anytime soon. India has regularly adjusted the tariffs for precious metals over the past year as part of efforts to mitigate their trade deficit but the increase in tariffs ended up causing a drastic spike in gold smuggling for the country, with illegal gold seizures reaching 20-year highs.
Gold demand in India continued to climb in spite of the high tariffs and imports for the month of August were up 176% over the year prior and for September the amount was more than 500% over 2013. Seasonal demand for gold in the country typically increases in ahead of religious festivals held during the fall. India is the world’s second largest consumer of gold behind China and last year, accounted for more than 1/4 of global demand.
From the CBEC: