Mumbai, July 22: The Reserve Bank of India (RBI) today tightened gold imports further by ordering nominated banks and agencies to ensure the export of one-fifth of every lot of gold imported.
The central bank said banks must retain 20 per cent of the imported gold in customs bonded warehouses and will only be able to further import gold after exporting at least 75 per cent of the gold from those warehouses.
The RBI added that the banks and agencies could make available gold in any form for domestic use only to entities engaged in the jewellery business.
The latest measure came as part of what it called a move to “rationalise” the import of gold into the country.
Both the Union government and the central bank have been concentrating on bringing down gold imports over the past few months to tackle the ballooning current account deficit (CAD).
India’s CAD, which simply put is the difference between inflows and outflows of foreign currency, rose to 4.8 per cent of the gross domestic product in 2012-13 from 4.2 per cent in 2011-12. A high CAD has also been blamed for the recent depreciation in the value of the rupee.
As part of these efforts, while import duty of gold was raised to 8 per cent from 6 per cent, the RBI had in the recent past placed various restrictions on banks’ import of gold.
These steps seem to have met with success as imports in June are estimated to have fallen to around 31 tonnes from 162 tonnes in May and 141 tonnes in April.
India imported around 830 tonnes of the yellow metal in the previous fiscal.
In its notification today, the central bank said all nominated banks/nominated agencies must ensure that at least one fifth of every lot of imported gold is exclusively made available for the purpose of export.
Analysts said the quantitative restriction was a clever move by the RBI as it had to be seen in the context of the tight export market now prevailing.
This had resulted in gems and jewellery exports from India declining in 2012-13.
With imports of gold now linked to exports, the amount of the yellow metal coming into India could be hit if exports do not pick up.
The instructions will, however, not apply to import of gold by units in the special economic zones, export-oriented units or star trading houses, which import gold only for the purpose of exports, it added.
The RBI said on a review of earlier norms, it “has been decided to rationalise the import of gold in any form/purity, including import of gold coins” and the new guidelines will come into force with immediate effect.
The government will issue separate instructions, if any, to the customs authorities and the DGFT to operationalise and monitor these import restrictions, the RBI said.
The banks and other authorised agencies have been asked to strictly ensure that foreign exchange transactions are compliant with new instructions, the RBI said, adding that they will be responsible for monitoring operations.
It further said earlier instructions on the import of gold on a consignment basis and against letters of credit had been withdrawn.
Gems and Jewellery Export Promotion Council chairman Vipul Shah said, “This step will boost exports and foreign revenue. There will not be any shortage of gold for domestic use. There will be some impact on prices.”
Source:-www.telegraphindia.com
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