The Reserve Bank of India (RBI) is considering fresh curbs on gold imports as unabated demand for the precious metal further drives up an already heavy current account deficit of the country.
India, the world's biggest consumer of the metal, imports 900 tonnes of gold annually. Gold is also the second largest item (in value terms) in the country's import basket after crude oil.
The RBI move comes close on the heels of the commerce ministry last month hiking import duty on gold to 6 per cent from 4 per cent.
RBI has proposed a combination of measures aimed at demand reduction and supply management along with measures to increase monetisation of idle gold.
In order to reduce demand for gold, RBI suggested better documentation of gold deals and ensuring a better tax treatment of gold. ''There is a need to design innovative financial instruments that can provide real returns to investors, ie, inflation indexed bonds,'' RBI said.
In order to unlock the hidden economic value of idle gold in the country, RBI suggested introduction of products like `Gold Accumulation Plan', `Gold Linked Account', `Modified Gold Deposit' and `Gold Pension Product', after a careful evaluation of regulatory issues.