New Delhi: Government on Friday raised tariff value on gold imports while FMC hiked margins on the commodity in futures trading, twin steps to control inbound shipments of the precious metal and check volatility in its trading.
Meanwhile, Prime Minister Manmohan Singh said India needs to reduce its appetite for gold.
"Clearly we need to reduce our appetite for gold, economise the use of petroleum products and take steps to increase our exports," Singh said while making a statement in Parliament on the state of economy.
"In 2010-11 and the years prior to it, our current account deficit was more modest and financing it was not difficult, even in the crisis year of 2008-09.
Since then, there has been a deterioration, mainly on account of huge imports of gold, higher costs of crude oil imports and recently, of coal," he said.
The CBEC raised the tariff value of gold to USD 461 per ten grams from USD 432. Tariff value is base price on which the customs duty is determined to prevent under-invoicing.
Commodity markets regulator FMC hiked initial margins in gold futures to 5 per besides an additional margin of 5 per cent on all the gold, effective September 2.
A margin is the amount of cash an investor must put up to open an account to start trading.
FMC said: "In the light of the recent volatility observed in the prices of Gold, the Commission has decided to raise the initial margin in respect of Gold contracts. The Exchanges are directed to impose initial margin on Gold contracts at the rate of 5 per cent of the value of the contract...."
The twin moves come in wake of prices zooming to all-time high of Rs 34,500 per 10 gms with a biggest ever one day surge of Rs 2,500 on August 28 as the rupee hit a historic low of 68.75 a dollar. Prices have risen 9 per cent so far in August.
The impact of twin steps was visible in the market as gold futures prices today slipped below the Rs 33,000-mark to Rs 32,774 per 10 gram at MCX. In spot markets it closed at Rs31,700 per 10 grams in the national capital today.