India may ease gold import curbs: Sources

Jan 06 2014, 19:18 IST
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India imposed the curbs last year when overseas gold purchases pushed its CAD to a record and undermined the rupee currency. Express India imposed the curbs last year when overseas gold purchases pushed its CAD to a record and undermined the rupee currency. Express
SummaryIndia imposed gold import curbs when overseas buys pushed CAD to record.

gold taken in the whole of 2012. The World Gold Council estimates about 150 to 200 tonnes may be smuggled during 2013, on top of official demand of 900 tonnes.

India's official imports were 21 tonnes in November, down from 2012's monthly average of 72 tonnes and sharply below the record of 162 tonnes hit in May, according to Thomson Reuters GFMS.

SUPPLY CRUNCH, PREMIUMS SOAR

The supply crunch helped drive Indian gold premiums to a record high of $160 an ounce over London prices in early December, versus about $1.30 to $1.50 an ounce in Singapore.

Jewellers, who estimate India's monthly demand to be nearer 60 tonnes, have been asking for a duty cut to 8 percent and have the backing of the main opposition Bharatiya Janata Party, which is leading in state polls ahead of national elections due this year.

A final decision lies with Finance Minister P. Chidambaram, who has so far resisted a cut but shifted last week to say he was in favour of continuing "some restraint" on imports.

N. R. Bhanumurthy, an economist at Delhi-based think-tank the National Institute of Public Finance and Policy (NIPFP), said: "We have unaccounted imports of gold that are much more damaging for the overall monetary system. It actually creates a huge problem for monetary policy.

"Now when they have come close to a comfort level on the current account deficit, there is definitely a need to review this import duty."

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