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FE NEWS SERVICE
Mumbai, Jan 27:The designated agencies, including banks (allowed by the Reserve Bank of India to import gold), need to be more competitive to minimise the negative impact of the recent hike in import duty, said World Gold Council chief executive (Middle East and Indian sub-continent) Ralf W Schneebeli.
Schneebeli is currently in India. On Wednesday, he distributed the first of the six weekly awards at the on-going Mumbai Gold Festival that ends in mid-March. Last month, Schneebeli participated at the WGC-organised gold jewellery exports workshop held in New Delhi. WGC will help the Bureau of Indian Standards (BIS) set up a hallmarking system in the four metros by mid-1999.
Speaking to The Financial Express on Wednesday at WGC's Mumbai office, Schneebeli said: "The recent hike in import duty is a wrong decision by the government and needs to urgently reversed in the wider interest of the country as well as the jewellery exporting community."
"After the import duty hike, the premium on gold in the illegalmarket has shot up once again to around 10 per cent," Schneebeli said. "This makes lucrative business for the smugglers to push gold into the country through illegal channels. This, in turn, will pose serious competition to the designated agencies."
Once the supply of gold moves out of the official channels, it is very difficult to bring it back for the jewellery makers, Schneebeli said.
Asked how much gold was imported through the officially designated agencies during 1997 and 1998, Schneebeli said the figures are being collated and would be available by end-February. "However, subsequent to the liberalisation of the gold policy, the quantity of gold coming through official channels has sharply increased compared to earlier years."
According to Schneebeli, if the jewellery makers and exporters want to remain competitive in the long run, it would be better for them to purchase gold more from the official channels. "Modernisation and expansion of business would be easier only through official deals andnot otherwise."
Speaking on the hallmarking facilities to be set up in the four metros (announced last month in New Delhi), Schneebeli said: "WGC does not have the necessary infrastructure and, therefore, the gold quality certification infrastructure will be set up jointly by the BIS, private sector companies, select banks and WGC. The certification mark would however be that of the BIS and not of WGC.
According to Schneebeli, making the hallmarking of gold mandatory for the jewellers is "simply not feasible, primarily because of the vastness of the Indian market and the lack of skilled manpower required for the purpose. It might also be too expensive a proposition at this stage."
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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