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Indian Gov’t Not Planning To Impose New Gold Import Restrictions
By Neils Christensen of Kitco NewsWednesday January 7, 2015 2:26 PM
(Kitco News) - Gold will continue to flow into India unobstructed as a government minister said on Wednesday there are no plans to impose any new curbs to imports.
The comment was made by Indian Trade Secretary Rajee Kher, during a meeting with industry representatives, according to a report by Reuters.
Markets have been waiting for some clarity on the future of gold imports since Nov. 28 when the Indian government and the central bank surprised the sector by removing the 80:20 rule, which said that 20% of all imports had to be exported before companies brought in more gold.
Howard Wen, commodity strategist at HSBC, said that the government’s comments clarify what was a confusing situation, leading to volatility in the country’s gold imports.
According to government numbers, 151.8 tonnes of gold was import into India in November. Imports fell in December to 39 tonnes, and are around 7 tonnes so far in January. Wen explained that imports were high in November because companies were preparing for tighter restrictions.
Although he is not expecting to see massive growth in Indian imports following the minister’s comments, Wen said that the market should stabilize.
Although the government has removed import restriction for gold, they have maintained increased duty costs, which in 2013 were raised 10%. In an interview with Reuters, Bachhraj Bamalwa, director of industry body the All-India Gem and Jewellery Trade Federation and who also attended the meeting, said the federation will continue to lobby the government to reduce the tariffs on the yellow metal.
The government first imposed the gold restrictions last year in an effort to lower its massive current account deficit; however, the drop in oil prices, which is the country’s largest import, has given the government more flexibility for its gold imports.By Neils Christensen of Kitco News; nchristensen@kitco.com
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