New Delhi: Commerce and industry minister Nirmala Sitharaman has pitched for ‘restriction free’ imports of gold to help gems and jewellery exports and also discourage smuggling.
While restrictions on gold imports can be justified on the grounds of maintaining the balance of payments (BoP), one has to be mindful of the fact that such barriers encourage smuggling, she said. The minister further said that custom authorities have confiscated a huge haul of smuggled gold in places like Delhi, Kochi and Chennai.
“So while from BoP point of view, it is nice, but restrictions are also leading to these kinds of channels which are unwanted and undesirable,” Sitharaman told PTI. “Ideally, I would like to see it free of restrictions,” she added.
The imported gold is mainly used by gems and jewellery exporters and people usually consider investment in the precious metal as safe haven.
The minister said gold is used as a raw material by handicrafts and gems and jewellery exporters as these are segments which give high-value returns. She further said the ministry last year had recommended to cut import duty on gold, but “given the situation then, I think nothing moved in our favour”. “But now I think, it is a question of economy where fresh look is being given to everything, we will make our presentation, we will see what the finance minister would want to do,” she said.
Outbound shipments of gems and jewellery, which accounts for about 13% in the country’s total exports, in October rose by 22% to $4.38 billion. Arresting the eight-month fall, gold imports more than doubled to $3.5 billion in October. The imports had stood at $1.67 billion in October last year. The country’s total official gold imports declined to 60 tonnes in April-July of this fiscal, much lower than 250 tonnes in the year-ago period.
India, the world’s second biggest gold consumer after China, imported 650 tonnes in 2015-16. Gems and jewellery sector had in July urged Prime Minister Narendra Modi to reduce gold import duty to 5% from the current 10% to check shift of business to neighbouring countries.
In 2013, the government increased the import duty to 10% with an aim to discourage the imports and contain current account deficit (CAD).