KATHMANDU, MAR 11 - The Nepal Gold and Silver Dealers Association has urged the government to increase the import duty on gold and make proper provisions for its import at the earliest as stocks in the market would last only a few more days.

"There is gold in the market only because it was being imported as hand-carry  earlier and because this is the off-season," said Tej Ratna Shakya, president of the association. "If the government doesn't come up with an alternative way for its import by Saturday, there will be an acute shortage and prices will go up," he added.

The current demand for gold in the market is around 10 kg per day. It is being traded at Rs. 27,950 per 10 gm (Rs. 32,600 per tola). After the government allowed import of gold as hand-carry by issuing a draft/TT from banks, traders have imported an estimated 700 to 800 kg to meet the local demand. However, following a hike in the import duty in India, Nepal Rastra Bank (NRB) had banned the import of gold even as hand-carry on March 2 fearing smuggling to India.

India had increase the import duty to Rs. 480 per 10 gm while Nepal has been importing at Rs. 130 per 10 gm for the last two years. 

According to an official at NRB, the government is also preparing to hike the import duty on gold through an ordinance

to adjust the duty in line with the Indian import duty very soon. "The government had promised to increase the customs duty within a week to stabilise the market, but there is no sign of it so far," said Shakya. "There are big chances of illegal imports of gold from India after a few days as the price goes up here following a shortage in the local market and this will also worsen the shortage of Indian currency."

He said that the government should also allow import of gold through hand-carry after the ordinance to maintain the demand and stop the price from going up. According to NRB, Nepal's gold import during the first seven months of the current fiscal year has crossed 14.03 tons.

Gold and silver dealers said that imports this year had skyrocketed because many people had started to take gold as an alternate sector for investment because of a decreasing share market and lack of a conducive environment for doing business among other reasons.

gold watch

•     Traders urged for ordinance to hike import duty soon
•     Off-season demand of gold at 10 kg per day
•     Fear of acute shortage and illegal import from India
•     Government asked to resume import through hand-carry
•     Investors found keeping
•     gold at home because of low price
•     Nepal imported 14.03 tons of gold during first seven month of 2009/10

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