Even as the bullion trade attempts to understand the new regulations relating to imports of gold, the World Gold Council expects the normal lull in Indian demand in the September quarter to be exaggerated this year. In its quarterly demand trend report released on Thursday, WGC pegged the June quarter gold import into India at 338 tonnes due to a 71% year-on-year jump in the total demand including jewellery consumption of 199 tonnes and bar and coin demand investment of 122 tonnes.
“The introduction of restrictions on payment terms for gold imports in May and an increase in import duties in early June created uncertainty in the market but had limited impact on end-user demand, which was met by stocks that had been built up to healthy levels following the April price drop,” said the report.
The Reserve Bank of India (RBI) was forced to clarify the changes in gold import norms, after the bullion industry found it difficult to decode the central bank’s instructions issued on July 22. Clarifying its position, the RBI has now put the onus clearly on nominated banks and agencies to ensure that at least a fifth of every lot of imported gold is exclusively made available for exports. The same is required to be supervised by the customs authority.
“Gold imports have come to a standstill in the last one month as the industry sought more clarifications on the export-linked import guidelines. Nominated agencies may manage to balance the orders of domestic players with exporters both of which collectively form their client pool,” said Prem Hinduja, CEO, Tribhovandas Bhimji Zaveri before the clarifications were announced. “However, the industry remains confused about the condition of parking export-intended imports in customs designated warehouses due to uncertainty around infrastructure and security,” he added.
Further, the RBI has taken steps to prevent agencies front loading of imports especially in the first and second lot of imports.
It has put a ceiling by linking the imports to the highest level of imports during any one of the last three years. “The quantity thus arrived at, however, will not be imported in one or two lots only,” says the notification.
The WGC report notes that recent changes in policy – including restrictions on payment terms and linking import quotas to exports – are likely to create confusion in the industry. For one, international bullion banks which do not have an Indian import