Business Standard

Bullion traders approach govt over high gold premium

Seek relief in gold import norms in the wake of reduced gold availability

Related News

The business seems to have lost glitter in the past couple of months. An increase in the import duty, exorbitant commissions charged by importing agencies and a lack of availability for domestic jewellers has left bullion traders wading through choppy waters.

Traders have sought relief from the central government. Recently, representatives of the All India Bullion and Jewellers Association (AIBJA) met the director general of foreign trade and senior government officials, including the revenue secretary and the economic affairs secretary, to air their grievances.

“We have given some suggestions to the government with regard to the gold import policy. Only a positive outcome can save this industry from a crisis. The current policy makes smuggling attractive and it has also created a monopoly of a few agencies designated for gold imports. This is against fair market practices. Also, a large number of jewellers and goldsmiths are on the verge of closure due to non-availability of gold,” said M C Jain, president, AIBJA.

Goldsmiths and artisans are also a worried lot, as there is negligible business even in the peak festive season. It is feared that the sector might witness widespread unemployment as over two million people, mainly in Gujarat, Kolkata and Coimbatore, are engaged in bullion and related businesses.

The official gold import numbers show a sharp decline since July. The imports have been minimal, in the range of 5-12 tonnes during recent months against 161 tonnes reported in May this year.

In its representation to the Union Finance Minister, AIBJA, among other measures, has demanded that the on gold imports be reduced from 10 per cent to six per cent.

The premium on gold for physical delivery has increased from $30 an ounce (an ounce = 31.1g) to $80-100 an ounce in a month’s time. “I have never seen such a high premium. A few years back, the maximum premium paid was up to $45 an ounce,” said a bullion trader from Ahmedabad.

“Only a few importing agencies are given licences to import gold under the Reserve Bank of India (RBI)’s norms. Jewellery making is a small industry in India but it employs a huge workforce. Non-availability of gold has resulted in a jobless workforce. Even at the time of Diwali, workers are sitting idle,” said Jagdish Acharya, a bullion trader.

“The customs duty has increased by 30 times since 2000, when it was just Rs 100 for 10g. Now, it has been increased to Rs 3,000 for every 10g. Notably, during the same period, gold prices have increased by merely five-six times,” Jain stated.

According to AIBJA, the increase in customs duty has made gold costlier by Rs 3 lakh a kg. “This has given rise to gold smuggling in India from neighbouring countries like Bangladesh, Nepal and Pakistan,” said a member of AIBJA. The association noted that nominated agencies for gold imports were charging unreasonably high commissions of up to $100 per ounce or Rs 2 lakh a kg.

Read more on:   
|
|
|
|
|

Read More

NAFED floats tender to import onions amid high domestic prices

After Onions touched an all time high of Rs 90 per kg, co-operative major NAFED today floated tender for import of the bulb from Pakistan, Iran, ...

Quick Links

 

Market News

SPML Infra gains 5% on Rs 1,232 crore new orders

The company has won new orders worth Rs 1,232 crore from Uttar Pradesh Jal Nigam, Agra and Sardar Sarovar Narmada Nigam, Gandhinagar.

Palm oil up 0.6% on spot demand

Oil for delivery in October edged higher by 0.59%

Copper rises by 0.3% on global cues

Speculators created fresh positions in tandem with a firming global trend

Aluminium up by 0.2% on global cues

Increased demand at domestic spot markets also influenced prices

TVS Motor touches new high on robust August sales

Total two wheeler sales increased by 47% yoy to 217,662 units in August 2014.

Back to Top