The current gold imports curbs in India are likely to remain in force to protect the rupee and check the current account gap, managing director of the largest refiner in the country said today.
The curbs will keep imports within the 650 metric tons to 700 tons range in the 12 months started April 1, from 650 tons the prior year, in the opinion of MMTC-PAMP India Pvt’s Rajesh Khosla. Stats from the finance ministry show 845 tons were bought in 2012-2013.
While the import limits might take varying shapes, the government will continue to control buying, Khosla said in an interview.
As Bloomberg reports, India is the world’s second-largest buyer of gold, and accounted for about 25% of global purchases in 2013. Restrictions by Prime Minister Manmohan Singh need 20% of shipments into the country channeled to jewelers for export and 80% sold on the local market.
The Prime Minister also increased taxation on imports and only allows banks and entities appointed by the government to import gold.
The new finance minister might change the restrictions after the on-going elections.
“I’m sure he will do something on 20:80. You may come up with a quota system, you may come up with an auction system, you may ask the banks to bid. Freeing the import of gold as it used to be prior to the 20:80, I don’t think that is going to happen,” Khosla said.
According to Mining, a review of the rules might open up the floodgates for gold imports in India, a market that can account for up to 1,000 tons of global purchases.
Several political figures have promised to lift the curbs on imports of a metal that’s so important to the Indian culture.
China is currently the world’s top gold consumer after overtaking India last year. India imports most of its gold. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
To contact the reporter of this story; Jonathan Millet at email@example.com