Commerce ministry wants to ease gold import norms
11 June 2014
The Commerce Ministry has proposed a lifting of the restrictions on gold imports in order to increase availability of the metal in the domestic market so as to boost jewellery exports.
The commerce ministry has sounded the finance ministry on and the matter is ''under their consideration,'' commerce secretary Rajeev Kher said.
''There is a need for rationalisation of duty and procedure.... We have already made it clear that there is a need to look at the current gold import regime,'' he said.
The government had raised import duties on gold imports while the Reserve Bank of India imposed conditions on gold imports in order to check rising current account deficit (CAD) that had gone up to over 5.6 per cent of the country' GDP.
Both the government and the RBI lifted some of the curbs on import of gold and also laid down various pre-conditions for inward shipments of the precious metal.
Kher also hinted at easing the 80:20 rule of the government and make it easier for exporters to source gold for exports.
''If you feel that the initial concerns of CAD are fully addressed, as we hope to in the next several months, then there will be a reason to restore or at least to some extent the position (gold imports),'' he said.
''There is a clear perception that there could be something that could have to be done. It will happen in budget if it has to happen,'' Kher added.
Under the 80:20 scheme, the government allowed nominated agencies to import gold on the condition that 20 per cent of the inward shipment will be exported. The permission to import the next lot depends on fulfillment of export obligation.
India's gold imports declined 72 per cent to $2.19 billion in May due to restrictions imposed by the government on inbound shipments of the precious metal to narrow the CAD.
India's current account deficit (CAD), which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 per cent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold.
Gems and jewellery exporters, which account for about 15 per cent of the country's total shipments, recorded a marginal 1.36 per cent fall to $3.43 billion in May.
During the 11-month period of the last fiscal, shipments declined by 7.15 per cent to $ 35.73 billion.