Home / Metal News / New Indian Government unlikely to repeal gold import rules soon

New Indian Government unlikely to repeal gold import rules soon

iconMay 20, 2014 13:18
Source:SMM
The hopes of relaxation of gold import norms by the to-be-formed new government under Narendra Modi has deflated the gold premiums in India.

Author: Paul Ploumis19 May 2014 Last updated at 08:38:22 GMT

NEW DELHI (Scrap Monster) : The hopes of relaxation of gold import norms by the to-be-formed new government under Narendra Modi has deflated the gold premiums in India. However, easing of gold curbs is unlikely to figure out in the top agenda of the new government. The government may continue with the existing norms for at least some more time, in order to keep the Current Account Deficit (CAD) under check.

According to CPM Group, there exist all possibilities of the new government scaling back import restrictions. But it is unlikely to happen immediately. CPM Group forecasts that partial rollback of tight gold norms are more likely to happen only during the second half of the year.

The easing of gold restrictions is likely to start with the controversial 80:20 rule- the rule that stipulates that a minimum of 20% of the imported gold must be exported before any further import. CPM Group believes that the authorities will be more hesitant to cut the gold import duties from existing 10%, as higher gold import duties have restricted the imports of yellow metal into the country. This in turn has contributed significantly to the country’s low CAD situation.

The strengthening Indian Rupee is likely to trigger more imports. Easing of gold import restrictions would let the CAD go out of control again. The new government would ensure that such a situation never arises. The only way to keep CAD under rein is by maintaining the current import duty structure of gold.

However, the gold-friendly Modi government is expected to bring about constructive amendments to the current gold policy which may turn out to be supportive for the yellow metal in the long run.

gold price
gold import duty
jeweller
import
CAD
India gold demand
CPM group
Narendra Modi
80:20 Scheme

For queries, please contact Michael Jiang at michaeljiang@smm.cn

For more information on how to access our research reports, please email service.en@smm.cn

Related news

SMM Events & Webinars

All