The country has so far imported 515.65 tonnes of gold this fiscal, he said, of which 300 tonnes were purchased from overseas in just April and May. Concerned over the impact of high gold imports on CAD, the government raised the import duty on gold periodically to 10% from 4% in the beginning of last year and the central bank mandated that at least 20% of the imported gold be kept aside for re-exports, leading to a crash in purchases from overseas.
In value terms, bullion imports dropped almost 40% to roughly $27 billion during the April-January period of this fiscal, industry data showed.
However, the plunge in raw material imports drove down exports of gold jewellery, medallions and coins by a half to to $15.60 billion in the April-January period.
This has led to renewed demand by the industry to lower the import duty on gold to 2% from the current 10% and scrap the 80:20 rule imposed by the RBI, especially when the country's current account deficit is expected to drop by almost a half to $45 billion in 2013-14 from a record $88.2 billion a year before."Gold can't be treated as the only villain in the whole CAD saga, as there are other commodities and finished products, too, which contribute to the widening CAD. As many as six crore people are dependent on the jewellery-making business for a livelihood and putting their lives to risk is not a sensible decision," said Soni.
India, which was dethroned by China last year as the world's biggest bullion consumer, barely produces gold and depends on imports to cater to both domestic and export demand. It purchases gold from overseas and exports value-added products such as jewellery, medallions and coins.
The industry executives said the government must clarify its stand on how much of imports it can allow while ensuring a satisfactory CAD position. It should also curb smuggling and destroy monopoly of a few people and agencies, who are adept at sourcing the metal illegally, they said, adding that smuggling affects the government revenue as well.
On January 27, finance minister P Chidambaram said the government could review in March some of the measures taken to curb gold imports, but any cut in the import duty on the metal could be effected "only when we are absolutely sure that we have a firm grip on the CAD".
Gold near 4-month peak
Spot gold prices hovered around their loftiest in four months in intraday trade on Wednesday as weak economic data from the US and an unprecedented growth in China's corporate debt raised concerns about a sustained global recovery and enhanced the precious metal's appeal as a safe-haven asset.
Spot gold edged up to its highest since October 30 at $1,345.35 an ounce before easing 0.1% on Wednesday. US April gold futures dropped 0.2% to $1,339.40 an ounce after scaling a four-month peak of $1,345.60 an ounce.