India, the world's largest gold consumer, is unlikely to announce a cut in customs duty on gold in its annual Budget on Friday, despite demands by a leading industry body, traders said on Monday.

"I think the government will gradually abolish the duty on the metal in the long term, but don't see any such move in the Budget on Friday," said Nayan Pansare, a senior official of trading firm Inter Gold Ltd.

The Bombay Bullion Association has demanded a cut in the duty to halt all illegal imports mainly from neighbouring Pakistan, a trade official said.

"We have not specified any figure in our pre-budget memorandum, but we think smuggling will completely stop if the duty is lowered to Rs 100 for 10 gram," he said.

India has a customs duty of Rs 250 per 10 grams, or 4.4 per cent of current prices.

Traders said illegal imports have fallen below 5 per cent of total purchases, compared with about 25 per cent around two years ago when the duty was Rs 450 per 10 grams.

"Smuggling of the metal has significantly fallen over the years and consumers are also not complaining about the duties," said Sanjay Kothari, chairman of the Gem and Jewellery Export Promotion Council.

"I don't expect a reduction in the levy."

India imports 75 per cent of its annual gold needs of about 800 tonnes, but purchases fell more than 30 per cent to 410 tonnes in 2002 from the year before due to high global prices, according to the industry-funded World Gold Council.

World gold prices at $352 an ounce have risen 18.5 per cent over the past year.