Author: Paul Ploumis
04 May 2015 Last updated at 08:24:07 GMT
MUMBAI (Scrap Monster): The Indian Parliamentary Standing Committee on Commerce in its report tabled in Parliament recently has stated that the gold import restrictions imposed by the government has failed to produce desired results. The Committee notes that gold imports are not the only cause for rising import figure. Instead, the government should devise more concrete measures to bridge the gap between exports and imports.
According to the report, country’s exports have failed to pick up, even as imports grew. The government has for long blamed gold as the main item contributing to increased imports. In an attempt to tame rising gold imports, the government had imposed several restrictions on gold imports into the country. The import duty on gold was increased thrice in 2013 to 10%. As a result of these policies, gold imports have dropped drastically. Consequently, the country’s current account deficit (CAD) dropped from record $87.8 billion during 2012-’13 to as low as $32.4 billion during 2013-’14.
The Parliamentary Standing Committee notes that the slowdown in exports has widened trade balance. The report urges the government to take necessary and immediate measures to boost exports from the country rather than placing excessive curbs on imports. It blames Commerce Department for failing to boost exports out of the country. The report calls upon the Department to revisit the export promotion schemes. The rise in exports to Sri Lanka, Nepal and Bangladesh has been offset by sharp fall in shipments to other neighboring countries such as Pakistan, Afghanistan and Bhutan.
The report states that trade deficit has become a “structural feature” for India. The government should change its orientation to bring about desired impact on the export front.