rediff.com

NewsApp (Free)

Read news as it happens
Download NewsApp

Available on  

Rediff News  All News 
Rediff.com  » Business » Will duty hike encourage gold smuggling?

Will duty hike encourage gold smuggling?

January 22, 2013 19:18 IST

The hike in import duty on gold from 4 toper cent could encourage its smuggling and other means of illegally getting the precious metal into the country, a National Spot Exchange Ltd (NSEL) executive said on Tuesday.

Saying that the decision is aimed to regulate handling of physical deliveries of the commodity by bullion dealers and traders, NSEL Head Business Development Amit Mukherjee said, "It will not impact the investment part of gold."

"However, the move could encourage gold smuggling and other means of illegally getting it into the country," he said, on sidelines of an event here.

Mukherjee was here to announce the launch of trading in e-gold and e-silver, in strategic alliance with the Commodity Online group. The product offers one price for the yellow metal pan-India, ending state wise disparity in bullion prices.

The Government of India (GoI), on Monday hiked the import duty on gold from 4 to 6 per cent, after which the prices of the precious metal shot up.

NSEL, has up to Rs 500 crore (Rs 5 billion) daily turnover in e-golds, a product in electronic form (demat), which it claims provides bullion to customers around 10-15 per cent cheaper as compared to prices offered by the banks.

Mukherjee said: "The hike in import duty is a boon for our products like e-gold, which offers gold 10-15 per cent cheaper as compared to gold prices of banks."

"Any levy of duty by government is going to impact the prices and people could shift from market to products like e-gold... the move is indeed a boon," he said.

Bullish on its e-gold and e-silver offerings, NSEL plans to take its physical delivery centres count from existing 16 to 40 locations, in the next six months.

"We have started doing physical delivery in 16 centres and plan to take this count to 40 in next six months. The new centres would come up primarily in tier-II and III cities," Mukherjee said.

NSEL also plans to launch trading in agri non-perishable commodities like castor and guar seeds, in next six months or so. It is also looking to expand its e-series portfolio by introducing aluminium, steel and hot rolled steel coils.

Presently, NSEL offers seven products like gold, silver, copper, lead, zinc, nickel and platinum from its e-s eries vertical.

© Copyright 2013 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.