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Darshil Parikh

India Increases Import Tax on Gold - WSJ.com - 0 views

online.wsj.com/...4624404578255393384149804.html

gold india import demand supply tax deficit

shared by Darshil Parikh on 21 May 13 - No Cached
  • Traders, however, expressed worries that the higher tax will lead to imports through illegal channels from neighboring countries where tax rates are lower.
  • Gold is India's second-largest imported commodity by value, behind crude oil.
  • India's love for gold is partly to blame for the country's wide trade deficit and large current-account gap.
  • ...7 more annotations...
  • NEW DELHI--India Monday increased the import tax on gold for a second time in 10 months in an effort to cut demand for the yellow metal, one of the biggest contributors to the country's large current-account deficit.
  • India had doubled the import tax to 4% in March as part of the government's budget announcement.
  • India's current-account gap ballooned to a record $22.3 billion, or 5.4% of gross domestic product, in the July-September quarter.
  • The South Asian nation--where gifting of gold jewelry is a tradition during weddings and festivals--is the world's largest consumer of the metal, and it meets all its demand through imports.
  • The government increased the import tax to 6% from 4% with immediate effect. It also made a similar change in the import tax of platinum, which is considered by many as an alternative to gold for investment and for making jewelry.
  • The tax increase in March and the effect of the rupee's fall, which increased its local price, have already eased the demand for gold. But the government still considers the imports uncomfortably high.
  • The government also relaxed the conditions imposed upon gold deposits made by individuals with banks.
  • Darshil Parikh on 21 May 13
     
    A good article by the WSJ about the uncomfortably high demand for gold by Indian consumers. It outlines the impact of high good demand: large trade deficit, high amount of imports, large current-account gap.
Darshil Parikh

Ecuador pushing ahead with reforms to lure mining investors - The Globe and Mail - 0 views

www.theglobeandmail.com/...article11979571

copper government intervention ecuador canada investors mining south america

shared by Darshil Parikh on 21 May 13 - No Cached
  • Ecuador does not have a large-scale mining industry, but the country is largely unexplored and could potentially have big copper, gold and silver deposits.
  • Socialist President Rafael Correa, who won a sweeping re-election victory in February, is eager to attract investment to reduce the economy’s dependence on oil exports.
  • “Investors asked for some reasonable things and that’s why we’re changing the law,” Mr. Correa said.
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  • Last year the government said the bill would include two reforms – one that will delay the coming into force of a windfall tax until miners recover their investments, and a second that will set a ceiling on mining royalties.
  • Under existing law, miners have to pay a minimum of 5 per cent in royalties, but the law does not state a maximum.
  • Kinross has said the reforms to the mining law would allow it to reap a bigger benefit from the project, which makes the signing of a contract more likely.
  • Those three are in relatively advanced stages of exploration, but junior miners have about 15 other exploration projects under way.
  • Darshil Parikh on 21 May 13
     
    A good article which outlines how a government will sometimes ease taxes and regulations to encourage the use of their certain resources: in this case, the untapped copper mines of Ecuador.
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