India's trade body pleads for immediate reinstatement of Gold Loan and Credit Facility

NEW DELHI (Scrap Monster) : All India Gems & Jewellery Trade Federation (GJF)- the trade body representing the gold manufacturers, wholesalers, retailers and exporters across the country  has urged the Finance Ministry to implement immediate restoration of Gold Loan Scheme and Credit Facility. In the letter addressed to Finance Minister P. Chidambaram, the trade body also requested to lower the gold import duty from the existing 10% to 5%.

According to Haresh Soni, Chairman, GJF, the prevailing 80:20 export norm on imported gold is likely to limit gold imports into the country. The norm specifies that 20% of every lot of imported gold should be used for export purposes. Unless there is exceptional growth in exports, the import of gold into the country may remain subdued. In such circumstances, the trade body urged the government to restore the Standby Letter of Credit (SBLC) Gold Loan Facility which in turn may aid the industry participants in raising adequate working capital to run the business.

The trade body in its appeal to the Finance Ministry sought for reinstatement of other credit facilities for gold buying. It also asked to lift the cash-on-delivery restrictions of gold imports. The jewellers in the country are in a fix over gold imports as they have to pay the cost of gold upfront.

GJF which demanded immediate action with regards to the above two demands also urged the government to slash the gold import duty to 5%.

The trade body points out that the tight restrictions have made it tough for jewellers to procure gold. The high premiums have resulted in sudden jump in the flow of smuggled gold into the country, which has already damaged the basic fabric of the industry. The severe shortage of gold led to sharp decline in gold jewellery sales during the festive season earlier this month.