Curbs on gold imports likely to continue for some more time

New Delhi: The Finance Ministry on August 21 indicated that restrictions on gold import scheme are likely to continue till situation becomes "more comfortable". "Perhaps at some point when we are more comfortable, when you start earning more from other exports, then may be we can import more gold," Economic Affairs Secretary Arvind Mayaram said at an event organised by Assocham here. "80:20 (gold import scheme) has worked very well till now. I don't think we need to look at this at this point of time," he added.

On August 14 last year, the government under the 80:20 scheme had allowed nominated agencies to import gold on the condition that 20 per cent of the inward shipment will be exported. The permission to import the next lot would be given on fulfilment of export obligation. Restrictions were imposed on gold imports following rupee depreciation. The domestic currency had touched its life-time low of Rs 68.83 against a dollar in August last year.

At the same time CAD, which is the excess of foreign exchange outflows over inflows, touched a historic high of USD 88 billion or 4.7 per cent of GDP in 2012-13, mainly due to rising imports of gold and petroleum products. In order to check rising CAD, the government had raised import duty on gold to 10 per cent, while RBI imposed curbs on import of gold and also laid down various pre-conditions for inward shipments of the precious metal.

The current account deficit came down to USD 32.4 billion or 1.7 per cent of GDP in 2013-14. The RBI in May had eased gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports. Gold imports declined 72 per cent to USD 2.19 billion in May. Finance Minister Arun Jaitley in his Budget speech had refrained from lowering duties on gold despite demands from jewellery industry.