Gold plunges Rs 2,400/10 gram after FM cuts customs duty on bullion
gold and silver to 6%, bullion prices fell sharply on Tuesday. While the August gold futures fell 3.4% or by Rs 2,468 per 10 gm to hit the day's low of Rs 70,250, silver September futures on the MCX tanked by Rs 3,200 per kg or 3.6% to hit the intraday bottom of Rs 86,000.
The reaction was triggered by Finance Minister Nirmala Sithraman’s announcement about the cuts in her Budget speech. She presented her seventh Union Budget on Tuesday.
«To enhance domestic value addition in gold and precious metal jewellery in the country, I propose to reduce customs duties on gold and silver to 6% and that on platinum to 6.4%,» Sitharaman’s Budget speech stated.
Anuj Gupta, Head Commodity & Currency at HDFC Securities, said the sharp fall was on account of the customs cuts.
Prithviraj Kothari, Managing Director of RiddiSiddhi Bullions Limited (RSBL) said the Finance Minister announced a reduction in BCD (Basic Customs Duty) in gold and silver from 10% to 6%.
Adding 5% of the AIDC (Agriculture Infrastructure and Development Cess), which remains unchanged, the total import duty on gold and silver has been reduced from 15% to 11%, he said. He called it a knee-jerk reaction while welcoming the step for the bullion industry.
“Bullion market participants were expecting a 5% cut in duties, but FM has announced a 9% cut, which is a commendable step from the government. Indian consumers would be able to buy at a 9% cheaper rate from today, so it will boost physical demand," he added.
The Indian jewellery industry had demanded a cut
