The Indian government today announced its plans to devise a long term strategy for importing gold into the country in order to ensure smooth supply of the yellow metal to jewelry exporters. The government is working out on the new strategy which will also keep the current and trade account deficits under check.
The Union Commerce Secretary Rajeev Kher has scheduled a meeting on January 7th, which will be attended by representatives from country’s finance ministry, the Gems and Jewellery Export Promotion Council (GJEPC) and the Reserve Bank of India (RBI). According to reports, the government intends to extend the ‘Make in India’ campaign into gold sector.
According to traders, the supply of gold has eased considerably following the abolition of the 80:20 rule. Any rise in gold imports may unsettle the country’s trade balance data. To limit gold imports into the country, the government also plans to introduce quota system on gold imports.
Meantime GJEPC points out that a major portion of the exporters’ capital is being blocked to obtain bank guarantees for customs, since the duty on gold imports have sharply risen from 2% to 10% during the past two years. The Council Chairman Vipul Shah urged the government to allow exporters to provide legal undertaking to Customs in place of expensive bank guarantees. He also called upon the government to scale up the duty drawback rates to catch up with the prevailing high gold import rates.
The country’s trade deficit had climbed to 18-month high during November ’14, mainly on the back of surging gold imports. The imports of the yellow metal during the month had totaled 151.58 tonnes, rising sharply by 38% when compared with the previous month.
Source:metal.com
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