Reserve Bank re-export norm seen clogging India's gold imports : Bullion Association

NEW DELHI (Scrap Monster) : The Indian gold importers are finding it hard to meet the re-export criterion set by the Reserve Bank of India (RBI). Only gold meant for re-export purpose are finding its way into the country. This has led to huge supply shortfall of the precious metal in domestic market.

The RBI had issued notification in July making it mandatory for gold importers to re-export at least 20% of the gold shipments brought into the country. As per the notification, any further gold import would not be permitted until documentary proof of exports to the extent of 20% of the previous lot is submitted.

According to Harmesh Arora, spokesperson, Bombay Bullion Association (BBA), it is impossible to achieve the 20% re-export target. Industry data for the past two years suggests that re-exports accounted for hardly 6% of total imports. Moreover, it takes 60 to 90 days for exports to get cleared from ports. The norm prohibits fresh gold imports until then.

The difficulty in meeting the re-export criterion has obstructed the flow of gold into the country. Gold imports by the country during the past two months are barely less than 4 tonnes. The BBA expects no improvement in country’s gold import situation, if the RBI norm is here to stay. The Association fears that non-availability of gold may dampen the festive season sales.