Govt likely to hike import curbs on various items, will spare gold: Source

The Central government is likely to increase import duties on precious stones, certain types of steel and electronics but will spare gold to prevent smuggling, a finance ministry official said on Monday.
 
The official, who declined to be named, told reporters the main reason for the planned increase in duties is to curb an inflow of items that normally move between China and the US, but could be redirected because of the tariffs imposed by the two countries.
 
The government is also trying to curb imports of “non-essential” items to support the rupee, Asia’s worst performing currency, and considering cutting oil import.
 
The rupee has fallen around 12 per cent this year, forcing the government to scramble for steps to arrest the fall.
 
News agency NewsRise reported on Monday that the finance ministry was considering a proposal to float a special gold deposit programme to cut imports of the metal by recycling the metal inside the country.
 
India is the world’s second-biggest gold buyer, after China, and spent $3.64 billion on such imports last month.
 
The steel ministry has proposed increasing the effective import duty on some steel products to 15 per cent from current rates ranging from 5 per cent to 12.5 per cent.
 
Among other steps being considered to soften the blow from high crude oil prices and declining rupee is cutting oil purchases, said Indian Oil Corp (IOC) Chairman Sanjiv Singh.
 
State refiners are looking at optimising crude oil inventory levels without in any way affecting fuel supplies in the domestic market, he told PTI on Monday.
 
Refiners maintain 7-8 days of inventory in tankages besides carrying stocks in pipelines as well as ships in transit. They are looking at reducing these so that monthly imports of crude oil can be reduced, he said.
 
India is the third largest importer of crude oil and rising international crude oil prices are inflating domestic transport fuel rates in a strong demand environment. Brent, the benchmark for half of world’s oil, climbed to $80 per barrel from $71 in the last five weeks, and the rupee lost ground against the dollar by 5-6 per cent during the same period, resulting in expensive crude imports.
 
India is 81 per cent dependent on imports to meet its oil needs.
 

 
“We had a meeting last to last Saturday (September 15) to deliberate on a host of issues facing the industry and in that meeting, one of the options that was considered was to reduce imports by cutting down on inventory levels,” Singh said.
 
An important factor guiding the decision was also Asian Premium climbing to as high as $3-5 per barrel in last 3-4 months, he said.
 
Asian Premium is extra charge being collected by oil-cartel Opec countries from Asian countries when selling oil in comparison to western countries.
 
“Reducing inventory levels and imports are being considered as temporary measures without impacting fuel supply in the domestic market,” he said. “This decision would in no way be allowed to impact supplies of petroleum products in the domestic market. Our commitment to meet domestic supplies remains supreme.”
 
Singh said the high oil prices will in long term impact demand and so reducing imports makes sense. India imported 18.6 million tonne (MT) of crude oil in August for $9.8 billion.
 
It had imported 18.1 MT of crude in the same period of 2017 for $6.4 billion.
 
During April-August, it has spent $48.9 billion on import of 94.9 MT of crude compared to $31 billion on the import of 89.1 MT in the same period last year.
 
Singh, however, did not say when the move will kick in saying these are ongoing discussions.
 
"One thing is very clear that we do not want petroleum product supplies in the domestic market to be impacted in any way," he said.