Gold imports surge on withdrawal of PMLA rule

From Oct 1, the govt has reduced the import tariff on gold by $18 to $413 per 10 grams

Gold imports have started going up and are expected to surge further after the government removed jewellery dealers from the purview of the reporting requirement under the Prevention of Money Laundering Act (PMLA) last Friday. The PMLA provision had been implemented in August. 

A premium of $3 an ounce has been quoted, which is attractive for importers. From October 1, the government has also reduced the import tariff value on gold by $18 to $413 per 10 grams, which means the import duty will have to be paid at a lower price. Consequently, imports have picked up, with the festive season further boosting the trend.  

Gold imports in September were estimated at 30-35 tonnes, including smuggled gold flows. The unofficial channel was becoming lucrative as the jewellery trade under the PMLA required know-your-customer (KYC) details for purchases above Rs 50,000. 

In August, about 70 tonnes of gold, including 20 tonnes of duty-free gold from South Korea, was imported into India. 

Sudheesh Nambiath, lead analyst, GFMS Thomson Reuters, said, “Indian gold imports to surge as the government goes easy temporarily on the identification proof for the purchase of Rs 50,000 to Rs 1,99,000 and on festive spirits.”  The government has said it is reworking the norms relating to the PMLA, and the new threshold for jewellers will be notified. 

The provision of submitting PAN (permanent account number) when buying jewellery above Rs 2 lakh was there but the market had digested that. 
 

Now, till the new limit is fixed regarding the PMLA, gold demand is expected to remain good. Shekhar Bhandari, senior executive vice president, global transaction banking, Kotak Mahindra Bank, said, “Now organised jewellers are expected to get the significant boost following good festival demand and the removal of PMLA provisions.”