Until mid-May, bullion dealers could place gold import orders with a designated bank by paying a margin upfront and the rest on delivery, but a new rule stipulates they pay the entire amount before importing.
Mohit Kamboj, President of the Bombay Bullion Association says he does not think this hike in gold import duty will affect a consumers appetite for gold, even if it means a gold bracelet may cost a little bit more.
Last month, just before the festivities began, the Indian government lent them some sheen by freeing the import of gold for domestic sale.
Jewellery shops remain bustling and Bhombhal, unbothered by the government's decision to raise the import duty on gold.
This month it has sought to douse the ardour with a sharp increase in the import tariff on gold.
India has raised import duties on gold by a half to try to rein in demand for the precious metal.
India has already taken several steps to damp demand for gold, including raising the import tax to 6% from 2% over the past year.
In August, the country began allowing more banks to import and export gold, opening up the gold market to the institutions and their clients.
The next big contributor to India's swelling import bill is gold.
The authorities have taken a number of steps to restrain the demand for the metal, including the federal government raising the import duty on gold and the RBI forbidding banks and non-bank financial companies from financing the purchase of gold in any form.
Another drag on prices has come from India, the world's biggest buyer of gold bullion, which introduced a 50% import tax that has triggered a 24% fall in the amount of gold brought into the country in the first quarter of this year.
He didn't elaborate what steps the government may take, but said there is no plan to ban gold imports or to further raise the import tax.
Before Adam Smith were the Mercantilists, who wanted to export everything, import nothing, and accumulate the difference in gold.
The country's huge demand for gold is one of the primary reasons for its large import bill, which has led to a widening of the current account deficit.
Despite a doubling of import duty on the metal recently, the purchase of gold continues unabated: India imported a whopping 850 tonnes of the yellow metal in 2012.
Severe import restrictions led to a situation in which nearly half the gold consumed in India was contraband and the average spread between domestic and international gold prices was as high as 53%.
India consumes a quarter of the global gold demand of 4, 000 tonnes, and spends about 12% of its import bill on the metal.
India too had several serious economic issues during the first half of the year (including high import duties, market turmoil and a local spike in the price of gold) that resulted in a reduction for gold jewelry.
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Anecdotal evidence suggests that gold imports were strong in the month, and were front loaded in anticipation of the hike in import duty, Sanyal wrote in a note to clients today.
Industry experts say there are signs that higher import taxes have encouraged smuggling, which hasn't been a problem since India lifted strict gold controls more than 20 years ago.
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