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Gold imports in August surge on duty-free buying from South Korea

India imposes a 10 percent import duty on gold

Reuters  |  Mumbai 

Gold imports in August surge on duty-free buying from South Korea

India's imports in August nearly tripled from a year ago, despite sluggish domestic demand as a recent tax change that allowed importers to ship in the yellow metal from without paying customs duty saw some traders purchasing heavily from the country, provisional data from consultancy showed.

Higher purchases by India, the world's second biggest consumer, could support global prices, trading near their highest level in a year. It could also widen the South Asian country's

The country's August imports climbed to an estimated 60 tonnes from 22.3 tonnes a year ago, said. In the first eight months of 2017, the country's imports rose to 617.5 tonnes, up 158 percent from a year ago.

"Trade houses imported nearly 20 tonnes from as they were not required to pay import duty," Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said on Monday.

India imposes a 10 percent import duty on gold, but this does not apply to countries with which it has Free Trade Agreements (FTAs), like To avoid duty-free imports from those countries, India had previously imposed a 12.5 percent excise duty.

This was scrapped along with other local taxes when a goods and services tax (GST) was introduced on July 1, allowing buyers to import from without paying import tax.

However, after realising the loophole the government on August 25 restricted imports of from

In August, traders were selling South Korean supplies at hefty discounts as demand was weak, said Daman Prakash Rathod, director at wholesaler MNC Bullion in Chennai.

Dealers in India were offering a discount of up to $13 an ounce in mid-August over official domestic prices that includes import tax.

Imports usually rise in September due to festival demand, but this year imports could stay around the August levels due to weak demand, said bullion head of a Mumbai-based private bank.

"Demand has been softening due to price rise. There is sufficient stock in pipeline due to last month's imports," he said.

First Published: Tue, September 05 2017. 02:10 IST