India mulls quantitative curbs on yearly gold imports

MUMBAI (Scrap Monster): The top sources from the Indian Finance Ministry indicate that the government is currently mulling proposal to place cap on the quantity of gold imported into the country per annum.

The rising demand for gold in the country has forced to government to think upon limiting the total yearly gold imports into the country at about 700 to 800 tonnes. In addition, limit may be placed on the quantity of gold that individual importer can bring in during a year. However, the government is yet to finalize the timeline for the said import restrictions.

The Finance Ministry sources indicated that the country’s Current Account Deficit (CAD) is still under control despite high gold imports during recent months. The country’s trade deficit for the month of October ’14 declined 6% over the previous month to $13.35 billion, when matched with the Sep ’14 deficit of $14.25 billion. The trade deficit for the month narrowed despite sharp 280% jump in gold imports during the month. The gold imports during November too are anticipated to remain at higher levels.

Before, the top Finance Ministry officials had held a meeting to take stock of the situation. The meeting was chaired by Finance Secretary and attended by Revenue Secretary besides senior officials from the Finance Ministry and RBI. Further to this, senior RBI officials had had several rounds of discussions with Finance Ministry officials during past two weeks. It was widely expected that government may announce fresh curbs on gold imports. However, sources now indicate that the government is not keen to raise the duty on gold imports. Instead, new rules are most likely to be limited to yearly cap on gold imports.

Meanwhile, premiums on physical delivery fell sharply in Mumbai. The premiums slipped to $10-15 over spot for 1 kilogram bars, when compared with $18-20 during the previous week.