FinMin holds review meeting, may tighten gold import norms

Worried over surge in gold imports, the government is contemplating to put curbs on inward shipments of the precious metal by big private agencies.
Top Finance Ministry officials today held a review meeting of the 80:20 gold import scheme, under which the big private agencies -- Star trading houses/Premier trading houses -- were allowed to import gold in May this year.
"Today we heard all the agencies and took stock of the situation. Discussions will continue," a government official said.
Gold imports have touched 150 tonnes in October, as against 24 tonnes a year ago.
The Reserve Bank of India (RBI) in August last year had imposed severe restrictions on gold import and raised import duty to 10 per cent in order to check burgeoning current account deficit and sliding rupee.

The steps by the central government helped lower gold imports substantially but also increased instances of smuggling.

In May, the previous UPA government, eased certain rules and allowed private agencies to import gold under 80:20 scheme. This facility was available to select banks only and other entities were barred from importing the metal.
Under the 80:20 scheme, an importer has to ensure that at least one-fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.
The CAD, which had touched a record high of USD 88.2 billion or 4.8 per cent of GDP in 2012-13 is estimated to have come down to below USD 32.4 billion or 1.7 per cent of GDP in 2013-14.

In April-June quarter of current fiscal, the CAD narrowed sharply to 1.7 per cent, from 4.8 per cent of the GDP a year ago.