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India gold imports yet to gain momentum; RBI's 80:20 rule spoils the party

iconMay 30, 2014 08:44
Source:SMM
According to reports, no major gold import has happened in India even after the Reserve Bank of India (RBI) eased its gold import norms recently.

Author: Paul Ploumis29 May 2014 Last updated at 07:52:59 GMT

MUMBAI (Scrap Monster): According to reports, no major gold import has happened in India even after the Reserve Bank of India (RBI) eased its gold import norms recently. The impact of the policy change is not visible yet, as big jewellers are still in negotiations with bank for getting leased gold. Also, the related customs notifications are yet to be issued. Further, the prevailing export requirement under 80:20 rule is seen preventing big jewellers from importing fresh consignments of gold.

The RBI had issued notification allowing star and premier export houses to trade-in the yellow metal. Also, banks and nominated agencies are now being allowed to provide gold for domestic use as loans to jewellers and bullion traders.

The country’s apex bank had sanctioned the loan facility in attempt to lend a helping hand to jewellers who are currently reeling under high finance costs. However, the loan market is unlikely to be big as only banks are allowed to provide loan to jewellers. According to jewellers, they have not started getting gold on lease, as negotiations with banks pertaining to gold lease rates are not yet over.

In addition, the 80:20 rule still acts as a roadblock to further gold imports. Big jewellers who have license to import limited quantities of the yellow metal could not do so, as they are bound to re-export one-fifth of the previously imported gold as finished jewellery.

Although RBI has issued notification, the related customs notification has not yet been issued, without which actual gold imports cannot happen. Importers fear that the new notifications may take some time for customs to be notified, which could potentially delay gold imports further.

gold price
gold import duty
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India gold demand
RBI
gold import
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80:20

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