Sonia for action on gold duty; govt says not now

Written by Agencies | New Delhi/Mumbai | Updated: Jan 24 2014, 04:07am hrs
India is not planning any changes to its record import duty on gold and other restrictions on imports until the current account deficit (CAD) is firmly under control, finance minister P Chidambaram told a TV channel in Davos.

Until we have a firm grip on the current account deficit I do not contemplate any roll back in any measure. We will have a full idea of the current account deficit only when the budget is presented and when the year comes to an end," he said.

He was answering a question about an earlier TV report that Sonia Gandhi, leader of the ruling Congress, had written to the government asking for gold import restrictions to be eased. Chidambaram said he had not read the letter.

You are requested to kindly look into the matter (demands of the gems and jewellery industry) for appropriate action," said a letter written by the office of Gandhi to the ministry of commerce and industry.

The All India Gems and Jewellery Trade Federation had written to Gandhi, demanding reduction in import duty on gold to 2% from 10% to encourage exports and curb smuggling.

The federation also demanded relaxation of the Reserve Bank of India (RBI) rule disallowing inward shipments of gold unless 20% of the previous imports is exported.

The rule has reduced imports and broken the backbone of the industry with short and erratic supply of gold, the federation's letter said.

Smuggled gold has now become available freely, which is corrupting the industry. There is a major crisis and chaos in the industry today. Current policies and regulations are not at all conducive to ethical practices... which is plaguing the entire industry, the letter added.

Removal of restrictions on gold imports, the industry said, would provide relief to trade and industry, besides protecting the interests of millions of skilled artisans.

The government and the Reserve Bank had imposed restrictions on gold imports to contain the current account deficit, which soared to an all-time high of $88.2 billion, or 4.8% of GDP, in 2012-13.