The government yardstick that decides how much it costs to bring gold and silver into the country has moved higher once again. In an official notification issued on Monday, the Central Board of Indirect Taxes and Customs (CBIC) lifted the base import prices for both metals. Since this is the reference value used to assess customs duty on imported precious metals, it feeds directly into what these metals end up costing in the domestic market.
How Much The Prices Went Up
According to the fresh notification, the base import price of gold was raised by $5 per 10 grams. After this increase, the new base import price for gold stands at $1,348 per 10 grams. For silver, the figure was pushed up by $83 per kilogram, taking its base import price to $2,175 per kilogram.
A Cut Just Three Days Earlier
What makes the move notable is that the government did exactly the opposite only three days ago. At that point, the base import price of gold had been trimmed by $80 and that of silver by $276. In other words, the stance flipped within a matter of days, and the rates have now been nudged back up. The thinking behind the exercise is widely seen as an effort to ease the strain building on India's foreign exchange reserves.
This is not a one-off. It is the second time in the past two months that the government has tightened the provisions linked to import duty on gold. Earlier, last month, it had raised the import duty on both gold and silver to 15%.
Steadily Tighter Rules On Silver Imports
It is not just the pricing that has changed. The rules for bringing in silver have also been stiffened over recent weeks. Traders now need to secure a government licence before they can import silver. Through a separate notification, the Directorate General of Foreign Trade (DGFT) shifted silver bars out of the ‘free’ category and placed them under the ‘Restricted’ category, with the change taking effect immediately.
The rules were tightened further at the start of this month. The government made it clear that silver can now be imported only after obtaining prior permission from the DGFT. Importantly, this condition applies even when the imports are routed through banks or other agencies designated by the Reserve Bank of India (RBI).
The Reserves Picture
The caution is reflected in the latest numbers too. In the week to June 5, the value of the Reserve Bank of India's gold holdings rose by $1.98 billion to $114.58 billion. At the same time, the country's total foreign exchange reserves slipped by $711 million over the same period to $681.61 billion.
