India, one of the world’s largest gold
consumers, is looking to reimpose curbs on gold imports after Diwali as there
has been a five-fold jump in inward shipments of the precious metal, which has
pushed the trade deficit to an 18-month high.
Finance minister Arun Jaitley said he
will look in to the matter after Diwali as the current account deficit (CAD)
widened to a record high of 4.8 per cent of gross domestic product (GDP) in
2012-13 and the rupee had turned weak and unstable consequently.
Earlier, the government and Reserve Bank
of India (RBI) had imposed a slew of restrictions on gold imports and the
government also introduced the 80:20 rule, which required major gold importers
in the jewellery sector to export, at least, 20 per cent of their gold imports.
Apart from this, only select banks were
allowed to import gold, which amounted to a physical restriction apart from the
high customs duty.
The physical restrictions were removed
once CAD came down and the rupee stabilised. But now with the trade deficit
shooting up, the revenue department is of the view that there is a need to
reimpose the earlier restrictions.
The government had increased customs
duty on gold to 10 per cent and banned import of gold coins and medallions
while RBI linked imports of the metal to exports. However, RBI has started
easing some of the curbs and allowed more nominated agencies to import the
yellow metal.
Gold imports jumped to $3.75 billion in
September on account of the ongoing festive season. Imports stood at $682.5
million in the same month last year.
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