MUMBAI, Feb. 2 (Xinhua) -- Gold prices fell for the second day in India on Tuesday after a 7.5-percent customs duty cut on the precious metal was announced in the federal budget on Monday.
India's prevailing customs duty before the rate cut in the budget was 12.5 percent that had made exports uncompetitive leading to large Indian and non-resident Indian diaspora moving to Dubai and Hong Kong among other centers to buy jewellery, said an industry expert.
However, India's import duty on gold is still the highest in the world as the government fears that lowering it would increase the trade deficit with rising imports of the precious metal.
According to the World Gold Council, India's gold demand was expected to rebound in calendar year 2021 after dropping to the lowest in over two decades last year.
The Asian third largest economy saw its gold demand dropping by over a third in calendar year 2020, settling at 446.4 tons compared to 690.4 tons in 2019, on the back of COVID-19-induced lockdowns and high prices.
The World Gold Council estimated India's gold consumption for 2020 at 700-800 tons.