Author: Paul Ploumis05 Mar 2014 Last updated at 00:11:11 GMT
MUMBAI (Scrap Monster) : The Commerce Ministry of India on Tuesday raised the issue for relaxing the gold import duty with the finance ministry as stringent regulations have opened route for uncontrollable smuggling over the year. The commerce minister while addressing a group of media persons here yesterday said that the prolonged prevalence of hiked import duty and premium has been adversely affecting the business of Indian jewelers as well as the importer-exporters of gold. Revival of gold import duty is required under the current scenario for improving gold demand in India.
The Reserve Bank of India (RBI) on behalf of the Govt. had last year imposed several stringent regulations on gold import owing to worries of ballooning current account deficit (CAD). Commenting on the over-regulation of gold import in a news conference, Mr. Anand Sharma, the Indian Commerce Minister said that the increase of tariffs and import duty has paved way for another drastic problem, gold smuggling. The shortage of stocks and decline of gold import triggered the gold smugglers to open a new channel for sneaking gold to India to satisfy the gold demand of India. Over a year, India’s customs officials have seized thousands of gold in the form of bullions, coins and jewelries imported to India through illegal means. Smugglers had even targeted NRIs as their gold carriers to give smuggling a new face of ‘legal smuggling’.
The Indian jewelry associations such as GJEPC had reported that jewelers were forced to fulfill the jewelry demand of the country by purchasing finished jewelries from foreign countries. According to the Commerce Minister of the country, the availability of adequate stocks for the gems and jewelry sector has to be ensured which is highly important for the recovery of business in India’s export sector. India’s Finance Minister, P. Chidambaram had assured that import regulations would be reviewed once the CAD was brought under control and targets it to reach below $ 45 billion against last year’s $ 88 billion.
Meantime, the jewelry export in India is reported to have suffered a big fall by more than 50 % since the beginning of 2014. The time consuming customs clearances have affected the jewelers considerably in receiving imported gold to run their business during the time when the festival and wedding seasons were at full swing. However, Sharma says that he has taken the issue to the finance ministry and the RBI and assures that the Commerce Secretary and the Director General of Foreign Trade will come up with a permanent solution to the rising import duty.