Cannot give assurance on reversal of 80:20 gold import rule, says Indian FM

Author: Paul Ploumis25 Jun 2014 Last updated at 08:17:13 GMT

MUMBAI (Scrap Monster): The Indian Finance Minister on Tuesday met representatives of the Gems and Jewellery Export Promotion Council (GJEPC). The members of the delegation urged the Minister to revisit the 80:20 gold import norm in order to save the gems and jewellery industry in the country. However, addressing the press after the meeting, Vipul Shah, Chairman, GJEPC stated that the Minister is yet to provide any assurance on reversal of the rule.

The industry body had long been demanding cutback of gold import duty from 12% to 2% and abolition of 80:20 gold import norm which restricts gold import into the country by nominated agencies through the condition that makes it mandatory for them to export 20% of the imported gold in order to qualify themselves for the next import. As per GJEPC, Finance Minister Arun Jaitely listened carefully to the demands raised by the members, but expressed fears that any change in 80:20 import rule would have adverse impact on the Indian Rupee.

The industry hopes the newly elected Narendra Modi government in India to act favorably to their demand by announcing reforms during the maiden Budget slated for second week of July. Even a cut in the range 2%-4% may give the domestic gold industry in the country, a handful of reasons to cheer about. This in turn may also slash hefty gold premiums in India and lower domestic gold prices.

The softened CAD data offers much room for the Ministry to lower the gold import duty. The CAD had narrowed to 1.7% of GDP in 2013-’14 compared with 4.7% in the financial year before that. However, failure by the Finance Minister to provide assurance on 80:20 rule has left many industry participants to speculate that the government may remain reluctant to do away with the much-troubled rule.