India's gold imports slump in December

Providing relief to the economy from widening trade deficit on account of gold imports, the inward shipments of the metal slumped in December to 39 tonnes, Commerce Secretary Rajeev Kher said on Wednesday.

India imported an astonishing 152 tonnes of gold in November which had threatened to disrupt the trade balance and impact the current account deficit (CAD).

"Gold imports at present on the basis of December and January performance have not been a cause of worry," Kher said.

In January so far, the imports was aggregated at seven tonnes (about $200 million) only. In September and October, the imports were 95.62 tonnes and 109 tonnes respectively.

Kher also said that there were no plans to curb gold imports and bring back restrictions like 80:20 scheme.

"It is gone, 80:20 scheme. Why should it come back... We are not looking at any new policy (for gold imports)," he said after a meeting on gold imports with representatives of gems and jewellery sector.

Higher gold imports in November have pushed up trade deficit to one-and-a-half year high of $16.86 billion in November as against $9.57 billion in the same month last year. CAD too had widened to $10.1 billion or 2.1 per cent of GDP in July-September period. Kher said various issues related with gold imports and gems and jewellery exports were discussed with the industry representatives at the meeting.

He said it was the follow up meeting after the 'Make in India' workshop last month. The sector is among the 25 focus areas that have been identified under the 'Make in India" programme.

"We are looking at improving our manufacturing in gems and jewellery sector and how to improve our exports. We discussed about sourcing of gold, financing of raw material, mining of gold, concept of fashion jewellery. We mainly discussed the policy environment required for entire gold thing," Kher said.

He also said that the ministry is looking at the issue of rationalisation of duty drawback scheme for the sector.

"We are taking it up, we have worked on it," he said. Gitanjali Group CMD Mehul Choksi said that the government should re-consider the high duty on gold imports as it is is "very high" as compared to international markets.

Choksi said that the issue of loan against gold was deliberated besides taxation matter on coins and bars were also discussed in the meeting.

The industry asked for duty free import of machinery and expanding silver jewellery market. "Duty factor is the foremost important factor because lot of manufacturing has gone out of the country," he added.

Gems and Jewellery Export Promotion Council Vice-Chairman Pankaj Parekh said smooth flow of gold for domestic consumption would help in reducing smuggling of the metal.

In a presentation to Prime Minister Narendra Modi recently, the Commerce Ministry has suggested cutting import duty on gold to 2 per cent from the current 10 per cent level.