India considers hike in gold import duty amid rupee slump and global oil crisis

Kochi (Kerala): The ongoing West Asian crisis has begun to impact India’s economic stability, with Brent crude prices surging to $105 per barrel and the Indian Rupee plunging past the 95 mark against the US Dollar. In response to these fiscal pressures, the Central Government is reportedly considering a major hike in the import duty on gold to curb consumption and stabilise the economy.

Potential rise in gold duty and fuel prices

To discourage gold imports and protect foreign exchange reserves, the government is deliberating an increase in the current 6% import duty to 10% or 12%, with some reports suggesting it could even reach 15%. Simultaneously, speculation is rife regarding a hike in petrol and diesel prices. State-run oil marketing companies (OMCs) have reportedly incurred losses exceeding ₹1 lakh crore over the past 10 weeks due to the combined effect of rising crude costs and the depreciating Rupee.

Despite the Centre previously slashing excise duties—reducing petrol duty from ₹13 to ₹3 and completely waiving the ₹10 duty on diesel—OMCs are still estimated to be losing ₹18 per litre on petrol and ₹25 per litre on diesel.

Rupee hits historic low

On Monday, the Indian Rupee suffered a major setback in the currency market, dropping 79 paise to close at ₹95.28 against the Dollar. At one point during intraday trading, the currency touched a record low of ₹95.34, reflecting the severe pressure from global market volatility.

Industry reaction and Prime Minister’s appeal

The Kerala Gold and Silver Merchants Association has urged the government to reconsider punitive duties. Association president K Surendran and general secretary Adv S Abdul Nazar stated that instead of discouraging gold purchases, the government should formulate policies to encourage the recycling and reuse of gold already held by the public.

The discussions regarding these stringent measures gained momentum following an appeal by Prime Minister Narendra Modi. The PM has urged citizens to reduce fuel consumption, avoid unnecessary foreign travel and, if possible, defer gold purchases for a year to help the nation navigate the current economic crisis.