In yet another step to contain the current account deficit, the Reserve Bank on Monday imposed restrictions on gold imports by banks and other authorised agencies.
As per the new norms, all banks and authorised agencies will have to ensure that at least 20 per cent of the imported gold is made available for exports and a similar amount is retained with the customs.
"It shall be incumbent on all nominated banks/nominated agencies to ensure that at least one fifth of every lot of import of gold (in any form/purity including import of gold coins/dore) is exclusively made available for the purpose of export," the RBI said in a notification.
It further added that such imports should be linked to financing of exporters by the nominated agencies.
The banks and other entities will also be required to retain 20 per cent of the imported quantity of the gold in customs bonded warehouses.
The restrictions are meant to contain gold imports, which in addition to oil, is putting pressure on the current account deficit that soared to a record high of 4.8 per cent in 2012-13.
The RBI and the government had earlier imposed other restrictions on import of gold to check CAD. The RBI further said banks and other authorised entities will be permitted to undertake fresh imports of gold only after the exports have taken place to the extent of at least 75 per cent of gold remaining in the customs bonded warehouse.
The notification said units in special economic zones (SEZ) and export oriented units (EoUs), premier and star trading houses are permitted to import gold exclusively for the purpose of exports.
The RBI said that on a review of earlier norms, it "has been decided to rationalise the import of gold in any form/purity including import of gold coins into the country" and the new guidelines come into force with immediate effect.
"Government of India will be issuing separate instructions, if any, to the customs authorities/DGFT to operationalise and monitor these import restrictions," the RBI added.
The banks and other authorised agencies have been asked to strictly ensure that foreign exchange transactions effected are compliant with the new instructions, the RBI said, adding they will be responsible for monitoring operations.
It further said that earlier instructions with regard to import of gold on consignment basis and against letters of credit have been withdrawn. Welcoming the move, Gitanjali Group Managing Director Mehul Choksi said it will help strengthen the rupee. "It is a fair offer to retain 20 per cent of imported gold for export purpose as this would help address the CAD situation and strengthen the rupee value."
India is the largest importer of gold, which is mainly utilised to meet demand of the jewellery industry. Imports stood at around 830 tonnes in 2012-13. To curb demand, the government hiked the import duty on gold three times in a year and raised it recently to 8 per cent.
Choksi said nearly $3-5 billion worth of gold is imported in cash every month, which hurts the rupee. In July, over $3 billion gold has already been imported.
"Going forward, I personally feel that the government should consider reducing the import duty by 1-2 per cent to curb illegal imports and unofficial entry of cash from overseas markets for gold imports," he added.
The rupee, which had touched an all-time low of 61.21 on July 8, today fell by 37 paise to close at 59.72.
Commenting on the new instructions, Gems and Jewellery Export Promotion Council Chairman Vipul Shah said 80 per cent of imported gold would be available for domestic use, while 20 per cent would be exported.
"This step will boost exports and foreign revenue. There will not be any shortage of gold for domestic use. There will be some impact on prices," he added.
According to him, last fiscal, only seven per cent of the imported gold was exported. He said the RBI's move will bring down imports significantly and boost exports.
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