In a major blow to the Indian bullion industry, the Finance Ministry has ruled out easing its curbs on gold imports any time soon. India’s retail sector has been seeking the softening of import duty for some time now.
Finance Secretary Arvind Mayaram told a media gathering on Thursday, during an industry and government meeting organised by industry chamber Assocham, that the government would consider easing the norms at some time in the future, when it was more comfortable with the current account deficit (CAD) situation and could start earning more from other exports.
Though CAD had fallen significantly in 2013-14, India’s apex bank RBI has noted that potential risks could emanate from both domestic and global factors.
CAD arises when a country’s total imports of goods and services and transfers are greater than exports,
Mayaram added that greenshoots of recovery were visible, and that the Indian economy was expected to grow by 5.8% this year. Inflation was also likely to moderate further, giving room to the Reserve Bank of India to soften interest rates.
The minister noted that speedy easing of norms for gold imports could however lead to a widening of CAD in 2014-15. The RBI has noted in a report released on Thursday that growth in gold imports turned positive in June 2014, after a span of 11 months.
Gold imports declined 26.39% to $1.81 billion in July due to restrictions imposed by the government on inbound shipments of the precious metal to narrow CAD. Imports of gold in July 2013 stood at $2.46 billion.
However, in June, gold imports were up by 65.13% to $3.12 billion. After registering double digit growth in May and June, the country’s exports expanded by jus 7.33% in July.
Replying to questions over the reported figure of 250 tonnes of smuggled gold, Mayaram said it was too big to be true and was not possible in the present day surveillance and the tracking of money trail through different laws dealing with money laundering.