As gold imports are witnessing a sudden spike over the past few months, the government is planning to impose some restrictions on yellow metal imports after Diwali. Inward shipments of gold increased by 450% y-o-y to $3.75 billion during September 2014. High gold imports pushed trade deficit to 16-month high at $14.25 billion in September as compared to $10.84 in August and $6.12 billion in the same month previous year.
In September 2013, the government imposed restrictions such as high custom duty and 80/20 rule to check the gold imports. However, in May, the government partly relaxed the gold norms by permitting nine premium and star trading companies to import gold along with banks and nominated trading agencies like MMTC and STC. Since then, Indian gold import has been increasing. Quantity wise, gold imports which averaged 10-15 tonnes till June, increased to 38.3 tonnes in July, 63 tonnes in August and 92 tonnes in September.
Commerce Ministry is likely to organize a meeting with the RBI’s representatives and stakeholders of bullion and gold industry to discuss gold imports issue. The meeting is likely to deliberate on restricting again the premium and star trading companies from gold imports following the complaints received by the domestic bullion industry. As per the import norms, 20% of gold imports have to be exported. Gold jewellery and bullion industry have suggested the government that their business has affected by premium and star trading firms as these firms are not selling imported gold to them for further exports.