Author: Paul Ploumis11 Nov 2014 Last updated at 07:29:10 GMT
NEW DELHI (Scrap Monster): The Indian government plans to introduce a new scheme to reserve 20% of the gold sold in market by importing agencies to small players. This follows the petition filed by the Delhi Bullion and Jewellers Welfare Association (DBJW) citing that the current norms favour large traders. In turn, the small jewelers are left with no option but to procure the yellow metal by paying even higher premiums.
According to existing gold import rules, star trading houses and banks are allowed to sell gold in local market, as long as they make one-fifth of the imported gold available for export. Presently, there are no clear guidelines with regards to sale of gold in domestic market. The petition points out that most of this gold are purchased by big jewelers. Under current circumstances, the small players are required to pay hefty premiums for procuring gold.
The government proposes to earmark 20% of the gold sold in the market to be available for smaller players. Such a move is expected to create a level-playing field, thereby saving small and marginal players from having to pay huge premiums. The Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry of the Government of India has initiated consultations and invited comments from stakeholders, based on which new guidelines shall be formulated.
A committee headed by Pankaj Parekh, Vice-Chairman, Gem & Jewellery Export Promotion Council (GJEPC) has been formed to look into the modalities of the new proposal. The committee, consisting of banks and star trading houses, is expected to submit its proposals before the court at the earliest.