| Date: |
21-11-2014 |
| Subject: |
Six trading houses imported 40 per cent gold in September |
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NEW DELHI: The case for curbing gold imports may have been strengthened after data compiled by the government showed a surge in inward shipments of the metal by star trading houses in recent months. Six star trading houses accounted for 40 per cent of the total yellow metal purchased overseas in September.
The data compiled by the department of commerce was shared at an inter-ministerial meeting called by the finance ministry last week. Star and premier trading houses were allowed to import gold in May under a scheme that required them to export 20 per cent of the metal as finished products before becoming eligible for further such purchases.
"The six firms had imported 7.57 tonnes of gold in April, which shot up to 47.26 tons in September. The 80:20 scheme is being misused by these exporting houses, which was raised in the meeting called by the department of economic affairs," a government official said.
One trading house, which bought 7 tonnes of gold in April, imported 20 tonnes in September. As per the Reserve Bank of India's guidelines, the upper limit of gold imports is 2 tonnes per month. "This shows this particular trading house, which imported 20 tonnes a month, completed 10 such cycles," the official said.
The spike in gold imports has widened the trade deficit, prompting the finance ministry and RBI to consider reimposing import restrictions on the star trading houses. The stringent rules had been for these large exporters and importers after the commerce department made a case that it was hurting exports. To check the widening current account deficit, the previous United Progressive Alliance government had raised the import duty on gold to 10 per cent from 2 per cent in stages and linked imports to the 20 per cent export obligation, allowing only select banks to import the metal.
The curbs helped the CAD to narrow to 1.7 per cent of GDP in 2013-14 from 4.7 per cent in the previous financial year. Small players have complained to the government about the unavailability of gold to them after star trading houses were allowed to import the metal. The matter is being looked into by the Directorate General of Foreign Trade. India imported 95.6 tonnes of gold in September compared with 42.2 tonnes in April.
In October, the value of gold imports jumped to $4.17 billion from $1.09 billion a year ago, pushing the trade deficit to $13.35 billion from $10.59 billion a year earlier. Another official noted that curbing gold imports is not easy.
"If gold is not there, then premium will go up, which is also not good. It will also come in through the smuggling route," he said. Gold imports by public sector undertakings have declined sharply after star trading houses were allowed to bring in gold shipments.
Source : economictimes.indiatimes.com
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