Gold price is Rs 35,000 per tola more expensive in Nepal than in India following the budget announcement by the union govt India
KATHMANDU, July 28: The price of gold in Nepal is significantly higher compared to India as the southern neighbor recently reduced customs duty on gold imports.
Announcing the Union Budget for the fiscal year 2024/25 last Tuesday, India’s Finance Minister Nirmala Sitharaman slashed the customs duty by 6 percent. As a result, the price of the precious yellow metal rallied down in the Indian market in the past few days, reported Indian media.
Due to the revised customs rate, the price of gold has already dropped below INR 70,000 in the past few days. With India's recent revision in customs duty on gold import, the price of the precious metal is expected to decrease further in the Indian market.
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In contrast, the then Finance Minister of Nepal, Barsha Man Pun, on May 28, increased Nepal's gold customs duty by five percentage points to 20 percent. Golder traders said they have already been facing an additional burden of up to NPR 28,000 per tola due to high customs rates.
Since gold is already cheaper in India than Nepal, with the decrease in the customs rate there, the gap in price at the local market seems to widen more.
Due to the customs policy of the Government of Nepal, the price of gold in Nepal seems to be at least Rs 35,000 higher than India. It has raised concerns about potential gold smuggling while scrupulous traders have been considering bringing in goods such as sugar and clothing from India.
Traders fear gold smuggling from India into Nepal
Due to the open border, smuggling of low-value items such as sugar, clothing, and seeds from India to Nepal has been occurring. While smugglers have been bringing gold into Nepal from Dubai, Qatar, Hong Kong, and China, there was no evidence of gold smuggling from India until recently. However, with the recent changes over the past two months, there is now suspicion that India might become a new hotspot for gold smuggling. There are already concerns among traders that gold smuggling from India has begun.
"With open borders on three sides, the risk of smuggling has increased because gold is more expensive in Nepal than in India," said Mani Ratna Shakya, former president of the Federation of Nepal Gold and Silver Dealers’ Association. "It's well-known that everything from vegetables to clothing is smuggled for a few extra rupees. Even before India reduced customs duties, the price difference in gold between India and Nepal has been significant since the budget was announced. We have heard of gold and silver smuggling already occurring in the Terai region," he added.
Gold prices drop this week as US economy shows improvement
This week, gold prices have fallen in the global market. Analysts attribute this decline to improvements in the exchange rate of the US dollar and its impact on the strengthening US economy.
Gold prices have also decreased in the domestic market of Nepal. On Sunday, the price was Rs 146,200 per tola. It rose slightly to Rs 146,300 per tola on Monday and remained stable on Tuesday. However, prices began to decline, reaching Rs 144,700 per tola by Friday, which is Rs 1,500 lower than the price at the beginning of the week.
The price of silver also experienced a slight decrease. The price was Rs 1,810 per tola on Sunday and dropped to Rs 1,730 per tola by Friday.
