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India is one of the largest consumers of the white metal in the world. As a result of rising prospects of unpredictable prices on silver, the imports are expected to fall up to 27% in 2012 although the import duty is kept unchanged. This declaration has been shown green signal by the head of the country’s biggest bullion importer. Sunil Kashyap, the head of Asia Scotia Mocatta, a unit of Bank of Nova Scotia said: Investors in India are worried about steep changes in silver prices denting the imports. If such thing persists for a long time, then it affects the prices on silver. He pointed out that silver imports are expected to drop down from 4,800 tones to 3,500 - 4,000 tonnes in 2012. Hence, it will influence overall supply of silver in the global market. According to the annual budget 2012, the prices on silver have increased 112% since 2009, despite the government’s provision to maintain the import duty at 5%, although the government abolished the excise duty on silver in order to ease investors, but it couldn’t make a huge difference to the fluctuating prices on silver. The budget doubled the import tax on gold up to 4% of value. Therefore, jewellers opposed it by complete shutdown and urged the government for a rollback of duty. They were totally upset by the government’s decision affecting the business. Kashyap said: “Import taxes increase the cost of (the yellow) metal to the final consumer and so the higher price may dampen demand for 2012.” He also pointed out that the imports on gold could plunge 38% to 600 tonnes in 2012. Scotia, the largest bullion importer in India, holds up to 35% market stakes and operates in partnership with wholesalers across the country. Increased taxes on gold will reopen smuggling routes affecting the government revenues because of decreasing imports. Kashyap said: “If they are trying to stop imports, well they have succeeded, but what will have happen to the revenues they were earning?” Such things are reducing investor’s interest in precious metal, especially yellow metal. Doubling import tax has long-term effect. It is strapping the investors to spend a big money in buying the white metal. Ongoing condition is key factors in plunging the prices on silver. It persists from long time because of varying excise duty. Hence, it is all the time best if you think twice before investing in silver, especially analyse the commodity market before you take any decision. Kyles Humphrey is a knowledgeable journalist in silver market, mining & stocks, who regularly writes articles related to silver prices, silver spot price including tips on investment in silver. Please visit silverprices.com for more details.
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