Government weighs gold import curbs as Re hits 56.75/$
03 Jun 2013
The finance ministry today said it would review its policy on gold imports, including sale of gold by banks, in order to curb rising import of gold amidst a steady decline in the value of the rupee.
The rupee was trading at 56.60 to 56.75 against the US dollar in afternoon trading on Monday.
The rupee continued to fall against the US currency despite the dollar's weakness against major currencies. The index of the dollar against six major currencies was down 0.3 per cent on Monday.
Finance minister P Chidambaram said the country cannot afford high levels of gold imports and may review its import policy, after imports of precious metals jumped more than 150 per cent in April.
Arvind Mayaram, secretary in the department of economic affairs in the finance ministry, said the government is weighing more steps to reduce gold imports, which may include banning the sale of gold coins by banks.
''More steps will have to be taken to reduce gold imports. Export import policy on gold will have to be reviewed. May consider banning gold coins sale by banks,'' he said.
Mayaram was speaking to reporters after a meeting of the sub-committee of the Financial Stability and Development Council (FSDC) headed by RBI governor D Subbarao.
The committee also discussed, among other things, regulation of chit funds.
Gold is the second biggest component in India's import list after crude oil. India is also the world's biggest buyer of gold.
Import of gold and silver into the country jumped 138 per cent to $7.5 billion in April 2013 from $3.1 billion in the year-ago period. Due to high gold imports, the country's trade deficit widened to $17.8 billion year-on-year in April.
The government hiked import duty on gold to 6 per cent in January in an attempt to curb imports of the precious metal after the country's current account deficit hit record highs. But a decline in overseas prices of gold helped importers overlook the duty burden.
India imported around 830 tonnes of gold in the 2012-13 financial year.