Gold import duty hike may support India’s current account by 23 bps — Report

NEW DELHI — The central government's defensive measures to protect financial stability, including a gold import duty hike to 15 per cent may trim the current account deficit by about 23 bps, a report said on Friday.

Markets have partly priced post‑war normalcy but face fresh strain as crude holds at $100–110, and Nifty could slide to 21,000 if the energy shock persists, the report from domestic brokerage Emkay Global Financial Services Ltd said.

However, the gold import duty hike could hit jewellery firms and nudge consumer price inflation up slightly, the report said.

The report projected that retail price hikes in petrol and diesel appear imminent.

It further noted that retail fuel under‑recoveries are estimated at Rs 17–18 per litre and a Rs 10 per litre price rise would cover roughly half the shortfall and could lift June inflation toward 4.4 per cent, increasing the likelihood of a Reserve Bank of India rate hike.

The domestic brokerage added that a US-Iran agreement is likely in coming weeks, which could avoid these measures. But the report cautioned that if crude stays elevated, policy responses could include direct intervention in currency markets, overseas bond or special deposit schemes, and limits on overseas remittances.

Many countries such as the Philippines, Vietnam and Thailand have imposed mandatory work-from-home and other measures to curb domestic travel.

This is a remote possibility in India, but it will impact tourism, hospitality, and aviation sectors negatively, according to the brokerage.

Overseas remittances by Indians grew 9.5 per cent pa over the past five years and now account for 174 per cent of CAD.

In addition, deterrents are already in place (20 per cent TCS on LRS above Rs 1 mn) – further curbs could support the rupee, the report added.