The commerce ministry in its proposals has sought a significant reduction in the import duty on gold in the forthcoming budget, news agency Press Trust of India reported, citing sources. The duty cut on gold has been sought with a view to pushing exports and manufacturing of the gems and jewellery sector, the report added.

In the last Budget, Finance Minister Nirmala Sitharaman had increased the import duty on the yellow metal to 12.5%.

India's gold imports, which have a bearing on the current account deficit (CAD), fell about 7% to $20.57 billion during April-November period of the ongoing financial year.

Imports of the yellow metal stood at $22.16 billion in the same period of 2018-19.

The decline in gold imports has helped in narrowing the country's trade deficit to $106.84 billion during the eight-month period under review as against $133.74 billion in the year-ago months.

India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.

Rising gold prices and a subdued consumer environment are likely to weaken demand for the yellow metal in one of the world's top markets for gold in FY2020, ratings agency ICRA said in its outlook for the Indian gold jewellery retail sector on Wednesday. ICRA expects gold jewellery demand to be subdued in FY2020 with expected volume de-growth of 6-8% on the back of elevated gold prices and weak consumer demand. (With Agency Inputs)