A day after India announced a hike in import duty, which rendered gold dearer in India and further widened the customs duty gap between the two countries, Pandey responded that he has now no option but to hike customs. [break]
“A proposal in this connection will be tabled in parliament soon,” he told myrepublica.com on Saturday.
Pandey even noted that he wished to raise the import tariff immediately. "But because the law requires a parliamentary nod for raising taxes, we will have to wait till parliament next convenes," he said.
Officials keeping track of the parliament meetings, which have failed to adhere to schedule, said that it could convene next month. What this means is, despite the foreign minister´s hurry, it will take some months for getting parliament´s endorsement.
Pandey did not disclose by what extent the tariff will be increased. Sources said the Ministry of Commerce and Supplies recently proposed that the duty be doubled from the present rate of Rs 130 per 10 grams.
"But we think it might have to be revised yet again," said the source.
Tej Ratna Shakya, the president of Nepal Gold and Silver Dealers Association, said the duty should be increased to at least Rs 400 per 10 grams if the government actually wants to check smuggling.
Unveiling the budget for 2010/11, India on Friday raised import duty on gold by 50 percent to Rs 480 (IRs 300) per 10 grams. That instantly raised the duty difference between the two countries to Rs 350 from Rs 190.
Given that gold imported with hard-earned foreign currency had been making its way to India through illegal channels even with a tariff gap of Rs 190, officials at the central bank had expressed fears that further widening of the tariff gap could encourage smuggling of the yellow metal.
Despite nominal rise in domestic demand, gold imports had grown by some 300 percent to Rs 25.54 billion in the first five months of the current fiscal year and was one of the major reasons behind country´s ballooning balance of payment deficit.
Sources further disclosed that apart from gold, the government was also discussing hiking import duty for some other commodities as well.
milan@myrepublica.com
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