Commerce Ministry pitches for easing of gold import restrictions

Attributing prevailing restrictions on gold imports as a major reason for rise in gold smuggling, Commerce Ministry has pitched for easing of gold import norms to increase the availability of the metal in the domestic market and boost exports.

Commerce and Industry Minister Nirmala Sitharaman said that strict norms on gold imports have been adversely impacting Indian gems and jewellery industry. Gems and jewellery exports account for about 15 percent of the country's total outbound shipments. The exports of gems and jewellery declined by 8.82% to $39.52 billion in FY14 from a year earlier due to prevailing Government’s restriction on precious metals imports.  By adding further, Commerce Minister said that gold import restrictions have also increased the gold smuggling cases in the country. During 2013-14, cases of gold smuggling had gone up to 2,441 as compared to 869 and 500 in 2012-13 and 2011-12 respectively.   

Gold is the second largest import item for India after crude oil and is mainly utilised to meet the demand of jewellery industry. The government had taken various measures like high customs duty of 10% and 80/20 rule to curb gold shipments to check country’s widening current account deficit (CAD). Under the 80/20 scheme, which was introduced in August last year, nominated agencies could import gold on condition that 20 percent of the shipment has to be exported and the remainder can be kept for domestic use. The export of gems and gewellary has been declining since October 2013. Meanwhile, India’s low gold import too has helped to contain the current account deficit (CAD) at $32.4 billion (1.7% of GDP) in FY14 as compared to $87.8 billion (4.7% of GDP) in FY13.