The government Friday proposed to increase import duty on gold and precious metal to 12.5 per cent, a move which would make the yellow metal and jewellery expensive in the domestic market. "It is proposed to increase custom duty on gold and other precious metals from 10 per cent to 12.5 per cent," Finance Minister Nirmala Sitharaman said in her Budget speech. The decision came at a time when the domestic jewellery industry was demanding a cut in the import duty. The commerce ministry, too, had in past recommended for reduction in the duty.