Govt calls high-level meeting to break gold import impasse2 min read . Updated: 19 Sep 2013, 06:26 PM IST
The meeting on Friday will discuss why enough gold is not being provided to exporters, says trade secretary
Mumbai/New Delhi: India has called a meeting of top officials from the finance and trade ministries in New Delhi on Friday to break a two-month impasse on gold imports that has crimped supply and pushed up prices in the world’s biggest gold consumer.
Gold imports into India have virtually come to a halt since 22 July when the Reserve Bank of India introduced the so-called 80/20 rule that says 20% of all imports had to be re-exported.
A lack of operational guidance on how the rules work continues to deter importing agencies from bringing in supplies because they fear their shipments could get stuck at airports.
The rules say imports will now have to be brought into a customs-bonded warehouse before being sent to the buyers.
Jewellers, retailers and exporters — who have all felt the pinch of supply issues — have placed fresh orders or are ready to do so, but banks are reluctant to process them till they get further clarification on the rules.
There is about a tonne of gold shipped to India stuck at airports awaiting clearance from customs, said Pankaj Kumar Parekh, vice-chairman of the Gems and Jewellery Export Promotion Council (GJEPC), a trade body representing 7,000 members.
“Customs is not clear how to implement the 80/20 principle, all are just waiting to hear from the RBI and customs department," said a dealer with the private bank in Mumbai.
Trade secretary S.R. Rao told Reuters the meeting on Friday will discuss why enough gold is not being provided to exporters.
“The rules are being misread by the people who are supposed to bring in gold and give it to exporters," Rao said, adding that all major importers will be at the meeting.
India’s jewellery exports have fallen sharply since the 80/20 rule as supplies to exporters has also dried up.
Customs commissioners of major airports and officials of GJEPC will also participate in the meeting, Parekh said.
Resumption of imports would provide a much-needed relief for the domestic market which is bracing for the peak wedding and festival season from next month.
With supply scarce and jewellers working off inventories, premiums have jumped to $35 an ounce over London spot.
India’s gold imports could be below 750 tonnes this year, Arvind Mayaram, economic affairs secretary at the finance ministry said on Wednesday. Finance minister P. Chidambaram has said India imported 845-850 tonnes in fiscal 2012-13.
India, battling with a record high trade deficit and a weak currency, is trying to curb imports of dollar-denominated gold, the most expensive non-essential item in its import bill.
India’s gold imports in August fell to $0.65 billion from $2.9 billion in July and a record $8.4 billion in May.