KATHMANDU, Nov 26: As the price of gold witnessed a significant fall in the domestic market, gold traders have now started seeking the government’s lenient policy to increase the quota on gold imports.
On Monday, the price of gold dropped by a notable Rs 15,900 per tola in the Nepali market after the government reduced the rate of customs duty to 10 percent from 20 percent. Earlier, the government had hiked the duty rate by five percent in its budget announcement for the current fiscal year.
Citing an increase in the inflow of smuggled gold from the Indian market, the government revised the customs duty to half of the previous rate. According to an official at the Ministry of Finance, the customs duty on gold has been reduced to bring down the price to par with those in the Indian market.
Revised interest rate corridor system introduced
After the Indian government, through its union budget announced in July, reduced the customs duty to six percent from 15 percent, the gold price in the Indian market was cheaper by around Rs 22,000 per tola than the rate in the Nepali market, as per gold traders.
Tej Ratna Shakya, a gold trader, said the expensive gold in the local market was one of the reasons behind the smuggling of the precious metal. According to him, gold is still cheaper in the Indian market by around Rs 5,000 per tola even after the government reduced the rate of customs duty.
With the government’s new decision, the Federation of Nepal Gold and Silver Dealers' Associations (FENEGOSIDA) fixed the price of gold at Rs 151,300 per tola on Monday. On the previous day, it was traded at Rs 167,200 per tola.
The domestic gold traders have long been demanding the government revise the rate of customs duty, stating that they were unable to carry out their business due to the hiked price triggered by the increased customs duty. As a result, gold imports by the banks, which are assigned to import and sell gold in the domestic market, dropped to as low as two kilograms a day.
While gold traders had stated that they sold around 50 kg of gold daily during Tihar, banks were reported to be left with an overstock of imported gold due to low demand in the local market. It was suspected that a larger segment of the gold supply was being met with smuggled gold.
Currently, the government has fixed the import quota of gold at 15 kg per day. “As the bullion business is now expected to go up, we have requested the government to raise the quota, which will even help facilitate the formal trading of gold in the domestic market,” President of the FENEGOSIDA, Arjun Rasaily, said.
