Government may not alter gold import duty: Ketan Shroff, Penta Gold

Those expecting a cut in the import duty of gold in the Budget for FY17 might be in for a disappointment. Ketan Shroff, MD of refinery Penta Gold, said the government was “unlikely” to cut the duty, currently at 10%. Shroff, who happens to be joint secretary of trade body Indian Bullion & Jewellers Association, said, he was speaking in personal capacity. He believes rising prices of gold and households’ penchant for the metal could result in an increase in imports and pressure the rupee, much like in August 2013, when the local unit plumbed to 68.85 to the USD. The government successively raised import duty to 10% from 2% back then. To discourage consumption of jewellery and bullion, it launched sovereign gold bonds and tweaked the Gold Monetisation Scheme to tap idle gold lying with households and temple trusts.

MARKETS INDICATIONS IN A DUTY CUT MCX polled spot price traded at a discount of almost Rs 400 to the front month futures contract (Rs 29,035) intraday Tuesday. Applying Shroff’s logic of spot gold trading at 2% discount to bank rate currently, front month futures are trading at almost a 1% discount to the bank rate. This is because of hopes of a duty cut.