India slashes gold and silver customs duties

Not only has India slashed import duties on gold and silver from 15% to 6%, but the reserve Bank has repatriated 100 tonnes of her gold reserves from the Bank of England with more to follow.

"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 per cent and that on platinum to 6.4 per cent," said the Finance Minister in the Budget 2024 speech. (22 July, 2024)

This is quite a turnaround for the Indian government, which being thoroughly Keynesian took a longstanding view that importation of precious metals made a negative contribution to the trade balance and was to be discouraged. Clearly, they didn’t see gold as money, but a means by which individuals evade exchange controls. It competed with the rupee as a store of value and was simply a hangover from the past.

Why the change?