I am confident that by the end of this year we will be able to revisit some of the restrictions on gold import but we will do so only when we are absolutely sure that we have a firm grip on the current account deficit," Chidambaram said at an event in New Delhi.
He, however, didn't give any time-frame by when the government could roll back some of the measures, including the hike in the import duty on the precious metal to 10% in August last year.
Commerce minister Anand Sharma said that he was in favour of a review of the gold import regulations that the Indian gems and jewellery industry has been seeking. We have by and large gone with the revenue department and the RBI on the matter. We are equally keen to ensure that we remain strong and competitive when it comes to the gems and jewellery sector, Sharma told reporters on the sidelines of the CII Partnership Summit 2014 in Bangalore.
I'm for a review. We will revisit this matter and see how to have a balance, Sharma said adding that he will take up the issue with the finance minister.
Earlier this month, UPA chairperson Sonia Gandhi had written a letter to commerce minister Anand Sharma to look into demands of gems and jewellery exporters for a reduction in the customs duty on gold and relaxation of the 80:20 rule set by the RBI.
The central bank had first mandated in July that at least one-fifth of the imported gold must be kept aside for re-exports and no fresh purchases from overseas can be made by a trader until the 20% of the reserved gold is shipped out after value addition. The government hiked the import duty on gold three times from 4% since the beginning of the last year. Authorities intensified crackdown on gold imports, especially since June, after imports in the first two months of this fiscal exceeded a record 300 tonne, worsening fears of a runaway CAD.
The All India Gems and Jewellery Trade Federation (AIGJF) had written to Gandhi, Chidambaram, Sharma and Prime Minister Manmohan Singh, seeking a massive cut in the import duty on gold to 2% from 10% and also a relaxation of the 80:20 rule imposed by the RBI.
However, the finance minister said on Monday: While we have lost some in perhaps tightening the gold smuggling, we have gained tremendously in terms of controlling the current account deficit and being able to manage the balance of payments and bringing about large stability in the currency."
The minister said about 1-3 tonne of gold is smuggled into the country every month following the restrictions imposed on shipment last year. I know gold smuggling has increased...But the restrictions on gold import were absolutely necessary because it is these restrictions which have brought down gold import which in April and May had crossed 300 tonne.
The long-term goal is to increase exports. We have to earn as many dollars as we need through exports to pay for imports.
CAD to be below $50 billion in 2013-14: Mayaram
Economic affairs secretary Arvind Mayaram said that record high foreign exchange reserves and strong fundamentals should reduce concerns about the rupee.
Our CAD is going to be below $50 billion, foreign exchange reserves are (at an) all time high, and we believe that we have very strong fundamentals in place, Mayaram told reporters.
The local currency fell to as low as 62.90 to the dollar on Monday, its lowest since November, as emerging markets remained under pressure on fears about an economic slowdown in China and uncertainty about monetary stimulus tapering by the US Fed.
On whether the recent decision of the RBI to withdraw pre-2005 currency notes was aimed at curbing black money, Mayaram said it was "not an effort to tackle black money which is a complex thing." Also, he added, withdrawal of a series of notes which have fewer security features cannot be termed a demonitisation of currency notes.
Global gold prices ease after uptick
Gold prices dropped in intraday trade after hitting a 10-week high due to weak sentiments in global stock markets, thanks to some profit-booking by investors ahead of a crucial 2-day policy meeting of the US Federal Reserve starting Tuesday.