Lower duty to reverse gold smuggling trend
The current trend of gold smuggling from Nepal to India is going to reverse.
The budget for the next fiscal year 2015-16 – starting from July 17 – has lowered import duty of gold to stop smuggling from Nepal but the bullion traders suspect that the lower import duty will reverse the current smuggling trend from Nepal to India.
The budget has reduced import duty on precious yellow metal by Rs 1,000 per 10 gm to Rs 4,200. But the duty on silver has been increased by Rs 10 per 10 gm to Rs 56. Bullion traders have asked the government to lower the import duty of per 10 gram gold to Rs 4,500 to make it equal with Indian import duty. But the budget has lowered the import duty to 4,200 making Rs 300 duty cheaper in Nepal that is expected to help smuggling of gold to India.
Likewsie, the bankers, which hold the sole permit to import gold have been in trouble as they have over 500 kg of gold stock that they have paid higher import duty. Their stocks have been unsold as the market was flooded by smuggled in gold.
Though, president of Federation of Nepal Gold and Silver Dealers’ Association Mani Ratna Shakya claimed that the government decision will help discourage gold smuggling – as it will remove the incentive for illegal traders – the trend is going to reverse due to lack of effective market monitoring system. “The government needs to monitor the bullion market properly,” he said, lauding the budget for slashing the duty. “Likewise, increase in duty on silver will also be helpful in discouraging excessive imports of the silver.”
Due to price hike in gold, the demand for silver has gone up in the market lately. Usually, the demand for silver hovers around 150 kg to 200 kg per day but silver import has gone up to 650 kg to 700 kg daily.
According to central bank, Nepal imported Rs 19.24 billlion worth silver – that is 92 per cent more compared to 10 months in the last fiscal year – in the first 10 months of the current fiscal year. The country witnessed an import of Rs 9.97 billion worth silver in the 10 months in the last fiscal year, the central bank data revealed.
Silver is mostly used for silver jewellary that used to be in a huge demand in the international market. But the silver jewellary export has dropped in recent years due to cadmium issue.
Meanwhile, the budget has also increased import duty – to 15 per cent from 10 per cent – in jewellery to discourage imports from India and promote domestic products.
It is suspect that people have been importing silver and selling it in India to buy Indian currency due to shortage of Indian currency.