NEW DELHI: Gold imports came down substantially in December after the government scrapped a rule that mandated traders export one-fifth of the gold consignment imported into the country. The trend has continued in January, providing relief to the government after a spike in imports in recent months worsened the trade deficit.
“There is no surge in gold imports. Government is not looking at imposing any new import restriction as the numbers for December and January are comfortable”, said commerce secretary Rajeev Kher after a meeting with the stakeholders on Wednesday to discuss ways to promote domestic manufacturing and exports of gems and jewellery. Gold imports fell to 39 tonnes in December and were placed at 7 tonnes in the first week of January, compared to 152 tonnes in November.
In September and October, the imports were 95.62 tonnes and 109 tonnes respectively. In value terms, gold imports shot up to $5.6 billion in November, 561% rise year-on-year, threatening to impact the current account deficit (CAD) and weigh down the rupee. Trade gap widened to an 18-month high of $16.8 billion in November, almost double of levels a year ago.
“The surge in October-November could be explained by Diwali demand,” said Kher. There was also some hoarding by buyers after the government had eased the 80 :20 rule.
The government subsequently abolished this rule, rightly diagnosing that it was distorting the market and increasing imports. The Wednesday meeting looked at various issues relevant to the gems and jewellery sector and to promote its manufacturing and exports in line with the ‘Make in India’ drive. Import-export, financing of raw material and mining of gold were discussed.
“We discussed what policy environment was required for the entire gamut of jewellery. Concept like fashion jewellery needs to be evolved in the country,” said Kher. Pankaj Parekh, vicechairman, gems and jewellery export promotion council said that the availability of gold in the domestic market will not be a problem after the scrapping of 80:20 scheme and smuggling will also come down.
“We also suggested ways to prevent investment in gold, which will help narrow trade deficit”, he added. “The government is also looking at taking up the matter of rationalisation of duty drawback for gold jewellery exporters in the budgetary consultations with the ministry of finance. We are taking it up in our budgetary consultations,” said commerce secretary.