The Central government has increased customs duty on silver and gold from 6 percent to 15 percent after the PM appealed to Indians to stop purchasing gold and silver amid ongoing tensions in West Asia and to save foreign exchange.
This shift is to balance India's current trade deficit and reduce the import bill. Prime Minister Modi has asked Indians to avoid foreign trips, choose work from home, and purchase local products due to the Iran-US war that has led to the blockade of the Hormuz Strait and stopped energy supplies.
Gold Imports have increased by 24 percent and silver by 149.48 percent, due to which India has to take these measures of restricting the purchase of gold and silver and reducing foreign spending. Officials from the oil ministry have said oil imports will also increase if the Middle East crisis continues. These measures are taken to safeguard macroeconomic stability and reduce foreign spending due to the global uncertainty caused by the Middle Crisis tensions.
The import duty on platinum, gold, and silver has increased to 15 percent, according to the notification from the finance ministry. The crude oil markets are volatile, and India is dependent on its energy imports, which have increased the import bill. The officials said that there is a need to manage the external sector. Custom duty adjustments have been used as a policy instrument historically.
India's foreign exchange should be properly prioritised towards essential imports such as critical technologies, capital goods, industrial raw materials, precious metals, and crude oil. These imports directly impact Indian economic activity, national security, exports, manufacturing, and food security.
Due to the geopolitical tensions, policymakers have to strategically prioritise external resources. During these stressful conditions, proper measures had to be taken to contribute to macroeconomic stability. These measures are aligned with the national economic discipline by Narendra Modi in the context of the current global scenario. Citizens of India have been urged to promote local goods, support national economic resilience, conserve fuel, and avoid foreign trips. This is the reason why precious metal imports are being viewed as part of a collective effort to encourage economic stability during the uncertainty around the world, the government official said.
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