Indian Finance Minister P Chidambaram
Indian Finance Minister Palaniappan Chidambaram attends a session at the annual meeting of the World Economic Forum (WEF) in DavosReuters

India will not revise its record high import duty on gold and other restrictions on imports until the nation's current account deficit is firmly under control, Finance Minister P Chidambaram said in Davos on 23 January.

India has a record high 10% import duty on gold and a rule that says 20% of all bullion imports must exit the country as exports.

The subcontinent used to be the world's largest consumer of the precious metal until the government made three upward revisions to the import taxes on gold, to reign in a record current account deficit (CAD).

The country's CAD could hover below the $50bn mark in the year to 31 March, 2014, a $20bn reduction from previous estimates.

Answering a query about an earlier media report that Sonia Gandhi, the leader of the ruling Congress party, had written to the Indian government asking for gold import restrictions to be relaxed, Chidambaram said he had not read the letter.

"Until we have a firm grip on the current account deficit I do not contemplate any roll back in any measure. We will have a full idea of the current account deficit only when the budget is presented and when the year comes to an end," Chidambaram told CNBC TV18 in Davos.

India's budget will be presented in February.

Pakistan Bans Imports

Earlier in the week, Pakistan said it would temporarily prohibited gold imports in a bid to check smuggling into neighbouring India.

Islamabad said on 21 January the ban would last for 30 days and that exports, mostly jewellery, would not be restricted. Pakistan last banned gold imports for a month in August 2013 after the country purchased gold worth $514m (£313m, €380m) in the preceding month.

Pakistan also said the ban would curb speculation on its currency.

Illegal Imports

The World Gold Council estimated that about 150-200 tonnes of gold may have been smuggled into Asia's third-largest economy in 2013, in addition to the official demand of 900 tonnes.

Smuggling surged after official imports into India shrank almost 90% in the six months to November as restrictions intensified. Between April and September, the latest data available, customs officials seized nearly double the amount of illegal gold taken in 2012.