Fin Min, RBI meet on gold import restriction, to meet again

Troubled by a massive jump in gold import over the first two quarters of FY15, representatives from the finance ministry, commerce ministry and Reserve Bank of India met here on Wednesday to review the 80:20 gold scheme.

Finance Secretary Rajiv Mehrishi chaired the meeting. “We took the views of all stakeholders involved and discussed the issue. We will meet again in two-three days, to see if the scheme needs to be maintained or tweaked with in any way,” said a finance ministry official, who did not wish to be named.

The 80:20 rule was notified in July last year, in the wake of a high current account deficit projection and bond purchase cuts by the US Federal Reserve. The rule means of every 100 units of gold imported, 20 units have to be exported.

There has been an almost 100 per cent jump in the quantity of gold imported into India in the April-June quarter and the July-September quarter from a year earlier. According to World Gold Council data, in the first three months of FY15, about 202 tonnes was imported. In the second quarter, 204 tonnes came in. In the three quarters before that, gold imports averaged 110 tonnes.

Gold import in September was $3.75 billion, at least $1 billion more than previous months. In October, too, imports were elevated.

There was a relaxation in the 80:20 scheme in May, when RBI allowed trading registered as nominated agencies with the Directorate General of Foreign Trade, apart from nominated banks, agencies or entities, to import gold under the scheme. It also allowed banks and nominated agencies to provide gold loans for domestic use to jewellers and bullion traders.