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With the macroeconomic sentiment seen improving, the government is likely to ease procedural restrictions on jewellery business in its coming foreign trade policy (FTP), scheduled to be released this month.
Speaking on the sidelines of the two-day India International Bullion Summit here on Saturday, Krishna Pratap Singh, additional director-general in the Directorate General of Export Promotion, said, "The overall business sentiment has improved. Also, the stress over the current account deficit has moderated. Therefore, we are expecting some measures to aid 'ease of doing business' in the coming FTP."
On the possibility of relaxation in the existing 80:20 rule and a cut in import duty, Singh said, "The government does not want a repeat of the balance-of-payment crisis seen in 1991. Therefore, the bigger challenge before the government is to look at macroeconomic views that affect everybody in this country, rather than addressing the needs of a particular business class. Therefore, we do not expect any relaxation in 80:20 rule and a cut in the import duty in the coming FTP. But if the fall in gold prices and the positive economic sentiment continues, such measures might be announced in the first quarter of the next year - January-March 2015."
With the gold supply restrictions in place, a couple of export-oriented units (EOUs) in the domestic tariff area transferred gold to their units in special economic zones (SEZs). As the EOU units were meant for export of ornaments alone, the transfer of gold was held illegal. As a result, the government has decided to ease some norms pertaining to EOUs to ease business in this segment. In the coming FTP, some relaxation might be announced for SEZs, Singh said. He added in India, gold-smuggling was likely to jump 50 per cent to 300 tonnes this financial year, owing to restrictions in imports through the official channel.
Meanwhile the World Gold Council on Saturday released its 'Vision 2020' document, which forecast India's gold jewellery exports to increase five times to $40 billion. It added 40 per cent of the gold demand would be met through domestic stocks, and 60 per cent from imports and mining. It sought a thrust to enhancing gold deposit schemes and an extension of the duty benefit and import entitlement for domestic gold deposits. The document also sought 75 per cent of gold sold be standardised and hallmarked, as this would fetch higher loan-to-value for loan against jewellery.
Somasundaram P R, managing director of the World Gold Council, said the curbs on gold import had hit investment demand.
