Friday, 11 July 2014

Govt considers easing gold import curbs after situation improves: Arun Jaitley

The government will be reconsider easing curbs import of gold once the fiscal situation becomes more comfortable, Finance Minister Arun Jaitley said.

"Not at the moment (easing curbs on import of gold)...if our situation gives me more comfort level, obviously these are flexible polices. They are not engraved in stone that you can't change them," Jaitley told PTI in an interview.

In the past year, India imposed import restrictions of gold, the second largest after oil imports, after a sharp increase in the current account deficit of the country.

However, stimulated curb smuggle in India, the world's largest buyer, through illegal channels "hawala" networks that are casual international remittance.

 India elevated the import tariff of gold last year to 10 percent from 4 percent and also commanded that 20 percent of the imported gold is exported, which is called the 80:20 rule.

The current account deficit (CAD) hit a record high of 4.8 percent of gross inner product, or about $ 88 billion in the fiscal year through March 2013, pushing the rupee to a record low of 68.85 per dollar August.

CAD has been drastically reduced to 1.7% of GDP, or $ 32.4 billion in 2013-14, helped mainly by the collapse of gold imports. Gems and jewelery exports note approximately 15% of total outbound shipments from India and exporters have been pitching for the lifting of import curbs on the yellow metal.

A report by under internal investigation SBI said even if prices rise to $ 115 (the worst), CAD still be below 3% of GDP in the current financial year (2014-15).

CAD of India, which is the surplus outflow of currency on the entries, hit a record high of 4.7 percent of GDP in 2012-13, mainly due to increased imports of gold and oil.

By January-March quarter stood at CAD $ 1.2 billion or 0.2 percent of GDP, compared to $ 18.1 billion, or 3.6 percent of GDP in the same quarter last year, according with the RBI.

He, however, said the government must be careful in the current account deficit (CAD) and fiscal deficit.

"Both CAD and fiscal deficit, I think we have to be cautious and careful," he said.

With the aim of check the increase in CAD​​, the government had posed import duties for the yellow metal to 10 percent, while RBI imposes restrictions on the import of gold and also provides various preconditions for shipments into the metal beautiful.

As a result of the combined efforts, gold imports has been falling. Fell by 72 percent to $ 2.19 billion in May 2014 due to restrictions imposed by the government.

"The budget also has not proposed any any proposal to cut import duty of 10% in gold or relax the strict conditions imposed by RBI for purchasing metal from overseas which has been the demand from industry, said" a Indian MCX Commodity advisory and generally offers services & news about in bullion gold silver trading market. Follow company Facebook profile page ( and get market news tweets @ 100mcxtips 

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