Mounting gold imports ring alarm bells in India; Fresh curbs on the cards

 

NEW DELHI (Scrap Monster): The gold imports by India have risen to higher than expected levels in September and October this year. According to the latest report released by World Gold Council (WGC), the country has overtaken China to be the world’s largest gold consumer during Q3 2014. The burgeoning gold imports are likely to throw the country’s Current Account Deficit (CAD) into chaos.

 

The Central government has expressed deep concerns over rising gold imports. The top Finance Ministry officials had held a meeting Thursday to take stock of the situation. The meeting was chaired by Finance Secretary and attended by Revenue Secretary besides senior officials from the Finance Ministry and RBI.

 

The discussions focused on possibilities of reinstating gold import restrictions on private trading firms. During September quarter last year, the Indian government had progressively hiked the import duty on gold from 2% to 10% and had imposed various curbs like the 80:20 rule in an attempt to bring down widening CAD by curtailing gold imports. The government in May this year had announced relaxations on gold import rules by allowing Star Trading Houses and Premier Trading Houses to import gold under RBI’s 80:20 scheme.

 

According to official sources, the deliberations between Finance Ministry and RBI will continue. A final decision is expected to be declared with the next two to three days, said Ministry officials.

 

The country’s gold imports in October are estimated to have surged to 148 tonnes, rising almost six times when compared with imports during the same month a year ago. The imports had surged by 175% and 450% respectively during August and September this year.