KATHMANDU: Gold smuggling is likely to drop as the government has slashed the import duty, bullion traders have said.
The budget announcement has reduced the duty on gold by Rs1,000 per 10 gm Rs4,200. However, the duty on silver has been raised by Rs10 per 10 gm to Rs56.
Bullion traders have long been urging the government to cut customs duty as a high tax has given rise to widespread smuggling.
Banks, which hold the sole permit to import the yellow metal, have been complaining that their stocks were lying unsold as jewellers could get it at a cheaper rate from smugglers.
Mani Ratna Shakya, president of the Federation of Nepal Gold and Silver Dealers’ Association (Fenegosida), said that the latest provision would help discourage gold smuggling as it had removed the incentive for illegal traders.
“The government’s move to slash the duty is laudable, but still it needs to monitor the bullion market properly,” he added.
Shakya said that the hike in customs duty on silver would also be helpful to discourage excessive imports of the precious metal.
Traders said that demand for silver hovers around 150-200 kg per day, but imports had jumped to 650-700 kg daily.
As per Nepal Rastra Bank’s statistics, imports of silver soared 92 percent to Rs19.24 billion in the first 10 months of the current fiscal year.
Shipments amounted to Rs9.97 billion in the same period last year.
“We were surprised by the surge in silver imports at a time when exports of Nepali silver jewellery had been falling,” said Tej Ratna Shakya, former president of Fenegosida.
“We suspect that people have been importing silver and selling it in India to buy Indian currency,” added Shakya. “A shortage of Indian currency has encouraged unscrupulous traders to resort to imaginative methods to take advantage of the situation.”
Meanwhile, the government has also raised the import duty on jewellery. The traders said that the move would discourage imports from India and promote Nepali products. The tax has been hiked to 15 percent from 10 percent earlier.
Import of the yellow metal from legal channels plunged 77 percent in the first four months of the fiscal.
