More curbs on gold imports likely in two days

India is the largest importer of gold after China

The government may announce further restrictions on gold imports on Wednesday or Thursday to discourage shipments, which had surged in October.

"Things are being worked out by the finance ministry and some announcements to slow imports may come in a day or two," said a government official, who did not wish to be identified.

On Monday, Reserve Bank of India (RBI) Deputy Governor S S Mundra had said the finance ministry and the apex bank were in discussions over measures to curb imports. Officials from the two sides had met on Thursday to find a solution.

India is the largest importer after China. Shipments surged four times to $4.17 billion in October from $1.09 billion a year ago. These touched 150 tonnes in October from 24 tonnes a year ago.

Imports pushed up India's trade deficit to $13.35 billion last month, against $10.59 billion a year ago. Crude oil and gold are two major items on India's import bill. This time, the government can take some comfort from low global oil prices. The increase in gold imports will widen the trade deficit, which will increase the current account deficit (CAD).

Curbs were introduced by the previous United Progressive Alliance government to check the CAD, which had touched a record of $88.2 billion, or 4.8 per cent of the gross domestic product, in 2012-13. The Customs duty was increased to 10 per cent. Curbs saw smuggling rise. Private agencies were allowed to import gold under a 80:20 scheme. This required a trader to export at least a fifth of every imported lot.