India is the worlds biggest consumer of gold and demand surges for the noble metal ,it has increased the duty on gold imports for the second time in six months, in an attempt to rein in surging demand for the precious metal.Indias gold imports touched 162 tonnes in May, nearly twice the average level.

The finance ministry said it had raised the duty to 8% from 6%.

Gold is a preferred investment option among Indian consumers and the recent drop in its price has boosted demand, but gold imports are also one of the biggest contributors to Indias current account deficit, which has been rising, prompting concerns among policymakers.

The government has been trying to bring down the deficit and improve the countries finances amid threats of a downgrade in its ratings.

However, some argued that the increase in the import duty was unlikely to impact imports as consumer demand remained high. They warned that it might encourage smuggling.