December gold imports fall, government unlikely to add new restrictions

New Delhi: The government is unlikely to put any fresh restrictions on gold imports, as the inward shipments have fallen sharply this month despite recent easing of some curbs by RBI. In the first fortnight of December, the gold imports have fallen to about 25 tonnes, from 150 tonnes during entire November. In December 2013, gold imports stood at around 30 tonnes.  On November 28, RBI abolished the controversial ‘80:20’ gold import scheme, which was put in place in August last year to curb high gold inflows as it was felt that rising imports of the precious metal were contributing significantly to the widening current account deficit. Under the scheme, at least 20 percent of the imported gold had to be mandatorily exported before bringing in new lots. This scheme was relaxed for certain entities earlier this year, but this led to concerns that undue benefits were accruing a select few. While there have been demands from certain quarters to put some fresh restrictions on gold imports, the government is of the view that the inbound shipments have come under control and the earlier prevalent anomalies have been addressed by scrapping of the 80:20 rule, sources said. “The government is unlikely to put in any fresh curbs on gold imports as of now,” a senior official said, while adding that the inbound shipments have declined significantly despite the scrapping of the 80:20 scheme. It was also suggested recently that the entities that imported gold prior to the scrapping of the scheme should not be subject to the restrictive provisions. The Finance Ministry, however, is against any such relaxation as it might hurt the very objective of scrapping of the scheme. “If we provide that leeway to the importers, it would defeat the very purpose of scrapping the scheme, which was benefiting a select few importers and had led to a spurt in imports,” the official added. When the 80:20 norms were relaxed in May, six private sector trading firms were permitted to import the gold under this scheme. Initially, only state-owned firms and banks had been permitted to the import. The six private firms, which were given relaxation, accounted for 40 percent of the total gold imports in April-September, sources said. This eventually led to the RBI scrapping the scheme. Accordingly, the import of gold is now permitted on consignment basis on payment in cash or through 100 percent margin backed letter of credit. In value terms, gold imports had surged by over six-fold to $5.61 billion (over Rs 35,000 crore) in November. India imported 96 tonnes of gold in September, 50.21 tonnes in August. Imports of the precious metal in April, May, June and July were 43.20 tonnes, 52.61 tonnes, 77.68 tonnes and 45.26 tonnes respectively. PTI