This is with reference to your article, “Gold may be spared duty hike” (September 25). Although the continued fall in the value of the rupee is a cause for concern, imports cannot be totally contained as its role in internal development and export trade cannot be overlooked. However, although duty hikes can, in general, curb imports, the same yardstick cannot be applied to gold. Gold is an essential requirement for our social customs, religious functions and marriages. Further, in the case of gold, although India is its second largest purchaser, the hike in customs duty to restrict its imports will not be a practical solution. Restrictions on gold imports with the imposition of higher tariffs will instead lead to black marketing because of high demand. The possible introduction of the special gold deposit scheme to curb imports by recycling the existing stock of gold within the country is only a partial solution to this problem.
The imposition of duty hikes on other import items will help restrict imports. The high cost of oil calls for a more restrictive control over its usage and reducing the stock of inventories. The total dependence on oil for fuel can be reduced by mixing it proportionately with other products like agricultural and vegetable waste which were recently discovered to have high potential for energy production. Further non-essential imports made from countries diverting their exports to India on account of the ongoing “trade war” between the US and China should be totally discouraged to prevent outflow of foreign exchange. Duty hike therefore has to be exercised discreetly to ensure that there is minimum outgo of revenue to prevent the rupee from falling further.
C Gopinath Nair Kochi
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