The government on Monday increased the Customs duty on gold and platinum by two percentage points to six per cent.

With this, the duty on gold has gone up five-fold since January last year, when it stood at one per cent.

The move is aimed at curtailing imports of the metals. Gold has been one of the biggest contributors to the spiralling current account deficit, at 5.4 per cent of the gross domestic product in the July-September quarter.

The government also allowed gold exchange-traded funds (ETFs) to deposit part of the physical gold held by them with banks and proposed a relaxation in banks’ gold deposit schemes to encourage individual investors to put their idle gold in circulation.

India imported 969 tonnes of gold in 2011 (calendar year) and 604 tonnes in 2012 till September, according to the World Gold Council.

Announcing the steps, Economic Affairs Secretary Arvind Mayaram told reporters the steps would lead to moderation in imports, as the additional gold held by individuals and mutual funds would come out in the market and the demand would be met from within the country. Mutual funds would get a marginal interest for depositing the gold with banks. The duties would be reviewed after some time if there was a moderation in gold imports, he added.(MANAGING CURRENT ACCOUNT DEFICIT)

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