Government to Re-Impose Gold Import Curbs to Check Trade Deficit

Barely months after gold import rules were eased, the government is looking to re-impose curbs as the country's insatiable appetite has led to a surge in the yellow metal coming into India, threatening to undermine the improvement in external balances.
The finance ministry's revenue department has flagged the issue and asked the Department of Economic Affairs and the Reserve Bank of India to review the May 21 relaxation in the import rules issued by the latter.
The so-called 80-20 rule was relaxed in May by the RBI at the behest of the finance ministry after jewellers, bullion dealers, authorised dealer banks, and trade bodies sought easier rules. Under the 80-20 scheme, nominated agencies were allowed to import gold on the condition that 20 percent of the import would be exported. The easing of rules meant more entities were allowed to import gold.
The trade deficit worsened to an 18-month high of $14 billion in September following a 450 percent rise in gold imports as importers rushed to take advantage of lower prices. "Gold imports have risen since the norms were relaxed….There is a concern," a finance ministry official said. "We have written to the DEA and the RBI."

This post was published at India Times