The finance ministry has moved to curb the current account deficit by raising the excise and Customs duties on gold and by raising tariff values and import duties on edible oil.
On its part, the Reserve Bank of India tried to help exporters by easing some restrictions imposed on holders of Exchange Earners Foreign Currency accounts and by giving effect to the commerce minister’s announcements regarding extension of the interest subvention scheme for one more year and for more items.
The government doubled the additional Customs duty on gold ore and concentrates for use in the manufacture of gold, and on gold dore bars having gold content not exceeding 95 per cent from two per cent to four per cent.
The standard rate of duty for gold bars, other than tola bars, bearing the manufacturer’s or refiner’s engraved serial number and weight expressed in metric units, and for gold coins having gold content not below 99.5 per cent, whether imported by eligible passengers or through routes other than post, courier or baggage, went up from four per cent to six per cent.
The standard rate of duty for platinum also went up from four per cent to six per cent.
The excise duty on gold bars, other than tola bars, bearing the manufacturer’s engraved serial number and weight expressed in metric units manufactured in a factory, starting from the stage of gold dore bar or silver dore bar, also went up from three per cent to five per cent.
The increase in duty rates, the government hopes, will help make gold more expensive, cool the demand for it and, thus, help reduce imports and bring down the trade deficit.
The government de-froze the tariff values of all edible oils, palm oil (crude and refined), and soyabean oil (crude) and notified these on the basis of prevailing international prices.
The price at which the importers will pay duty went up in $ per tonne, from 447 to 802 for crude palm oil, from 476 to 853 for RBD palm oil, from 462 to 828 for other palm oil, from 481 to 860 for crude palmolein, from 483 to 862 for other palmolein and from 580 to 1190 for crude soyabean oil.
The tariff value for RBD palmolein remained unchanged at $863 per tonne. Besides such a steep increase in tariff values, the government raised the duties from zero to 2.5 per cent on import of crude edible oils but left the duty rates on refined edible oils unchanged at 7.5 per cent.
Although it says the move is intended to protect farmers and the impact on prices will be marginal, domestic refiners say the reduction in the difference between import duty on refined and crude edible oils will hurt them.
The government hopes for higher duty collections and lesser imports, helping curb the fiscal and current account deficits.
Keeping in view the operational difficulties faced by EEFC account holders and banks, RBI decided to dispense with the stipulation made in May last year that the account holders can access the foreign exchange market for purchasing foreign exchange only after utilising fully the available balances in the EEFC accounts.
RBI also notified a list of 134 tariff lines of engineering products for inclusion in the interest subvention scheme for the quarter January to March 2013 and extended the scheme for select sectors till end-March 2014.