India has increased the duty on imports of gold jewellery to 15% from 10%, in its latest attempt to curb the demand for the precious metal.
Imports of gold jewellery rose after the government increased duties on import of raw gold, including bars and coins, three times this year.
Demand for gold in India has risen after the recent drop in prices.
However, gold imports are also one of the biggest contributors to India’s widening current account deficit.
A current account deficit is the difference between inflow and outflow of foreign currency and it occurs when a country’s total imports are greater than its exports.
A widening deficit strains the country’s foreign exchange reserves, as well as the value of its currency.
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