"There is already a high duty (on gold imports) now so doing higher and higher import duties can in fact become counter-productive, more smuggling avenues etc and that is why we do not want to try and take further aggressive measures from our end," Additional Secretary in the Commerce Ministry Arvind Mehta said.
He was replying to a question whether the government is considering increase in the gold import duty on account of huge jump in the imports in December 2015.
On increase in imports, Commerce Secretary Rita Teaotia said the Finance Ministry would take a view on putting any kind of "control" measures on the imports.
She said the Commerce Ministry has not send any kind of recommendations to its finance counterpart.
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"Whatever (gold) is coming, it is going into manufacturing" and products are getting exported or sold in the domestic market, she added.
She said the gold imports duty is an "issue which the Finance Ministry will take a call and as far as Department of Commerce is concerned, we have not made any recommendations".
Trade deficit during April-December this fiscal narrows to USD 99.2 billion as against USD 111.6 billion in the same period previous year.
Further, Mehta said that the ministry is watching the situation as the Finance Ministry has done some amount of gold monetisation.
"What we are hoping is that at some stage some of those mechanisms kick in and the demand for gold goes down...," Mehta said.
In fact the gems and jewelery sector is demanding cut in the gold import duty as the sector's exports is declining. It dipped by 7.75 per cent to USD 2.46 billion in December. There is a 10 per cent duty on gold imports.