The clampdown on gold imports has led to increased raw material costs for jewellery exporters and shipment of finished gold products have taken a hit.
The crisis on the CAD front started in May 2013 when the US Federal Reserve announced its intent to roll back quantitative easing, leading to a bloodbath in global stocks and money markets. At that stage, the finance ministry and RBI took a number of steps. The import duty on gold was raised thrice to take it at 10% to curb its shipments. The RBI, among other steps, tied gold imports with exports (in 80:20 ratio). The measures taken by the government and RBI helped contain the CAD to $32.4 billion in FY14 and build up foreign exchange reserves to a level of $316.4 billion on July 4, 2014," Jaitley said in reply to questions in the Rajya Sabha.