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Import duty on gold raised to 15% to check current account deficit

Small crude oil producers with annual production of less than two million barrels have been exempted from the cess
Last Updated 02 July 2022, 03:21 IST

The Centre on Friday raised import duty on gold to 15 per cent from 10.75 per cent at present in order to check the sudden surge in import of the yellow metal, which has a bearing on the country's current account deficit.

It also imposed a cess of Rs 23,230 per tonne on domestically produced crude oil and levied special additional excise duty/cess of Rs 13 per litre on export of diesel and Rs 6 a litre on export of petrol to ensure their availability in the domestic market.

"Crude prices have risen sharply in recent months. Domestic crude producers sell crude to domestic refineries at international parity prices. As a result, domestic crude producers are making windfall gains. Taking this into account, a cess of Rs 23,250 per tonne has been imposed on crude. Import of crude would not be subject to this cess," finance ministry said.

Small crude oil producers with annual production of less than two million barrels have been exempted from the cess.

The ministry said that to incentivise additional production over the preceding year, no cess will be imposed on such quantity of crude that is produced in excess of last year production by a crude producer.

The move comes in the wake of some of the refiners, especially the private ones, preferring to export petrol and diesel produced from Russian crude offered at discount to deficit regions of Europe and the United States amid the Russia-Ukraine war.

There were reports that private pumps in certain states like Madhya Pradesh, Gujarat and Rajasthan, which depend heavily on private transport fuel supplies, had run out of stock as private refiners preferred to export rather than sell locally.

"These are extraordinary times when oil prices internationally are unbridled. If oil is not being available and being exported with such phenomenal profits, we need some of it for our own citizens," Finance Minister Nirmala Sitharaman said.

India ships more than 85 per cent of its domestic requirement of crude but produces about 30 million tonnes domestically. The levy on crude is likely to fetch the government Rs 7,000 crore per year.

Indian Oil Corporation, Reliance Petroleum, Bharat Petroleum Corp, Hindustan Petroleum and Nayara Energy Ltd (formerly Essar Oil) are some of the big refiners in India. Reliance petroleum apparently exports 90 per cent of its produce. After the measure, shares of RIL, ONGC fell sharply.

The move on oil together with gold import duty will help curb the rupee fall, which has hit 79 per dollar.

"There has been a sudden surge in imports of gold. In the month of May, a total of 107 tonnes of gold was imported and in June also the imports have been significant. The surge in gold imports is putting pressure on the current account deficit," a notification by the finance ministry said.

According to the World Gold Council, India's gold purchases in 2021 reached their highest in 10 years.

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(Published 01 July 2022, 19:13 IST)

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