Meanwhile, the central bank - which had expressed concerns over rise in smuggling from Nepal to India amid rise in duty there - chose to plug gold imports by restricting banks from issuing Telegraphic Transfer (TT) and draft for the purpose of importing gold with immediate effect on Tuesday. [break]
The new provision has shot up the price of yellow metal by Rs 255 per 10 ten grams in the afternoon, compared to the price at which it was traded earlier on the day.
“We have initiated exercises to hike the import tariffs within the next few days. It will come through ordinance,” Finance Minister Surendra Pandey told myrepublica.com.
Sources said that the ordinance was preferred for the tariff change because consultations showed that the government will not be able to adjust rates even in a month if it is to follow the formal course of getting those changed through parliament. Earlier, Pandey had said that parliamentary course would be followed to adjust the rates.
The government has been pressed to adjust import duty urgently after India last week hiked gold´s import tariff, rendering it dearer in India and further widening duty gap between the two countries, which the central bank feared would spur smuggling yet again.
“With the fresh duty, gold has become expensive by some Rs 500 in India than in Nepal. This is a handsome return to boost illicit trade,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers´ Association.
The association has suggested the government to increase the import duty to Rs 480 per 10 grams, which is at par with India´s rate.
It has also welcomed the central bank´s decision to tighten imports. “This was very necessary because even through hand carry, importers were presently bringing in at least 25 kg of yellow metal, which is almost double the demand in the market,” said Shakya.
He said that the association jacked up the retail rates to Rs 27,520 per 10 grams in the afternoon from Rs 27,265 set earlier on the day because importers stopped selling gold to the dealers as soon as the central bank issued the circular to the banks, restricting them from issuing TT and draft for financing gold import.
“We fear that the importers will leave the market short-supplied. Hence, the government must take the necessary decision immediately and open the imports yet again,” he added.
milan@myrepublica.com
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