The news that India’s current account deficit (CAD) for the March 2014 quarter had further declined to $1.2 billion (0.2 per cent of GDP) from a level of $4.2 billion in the previous quarter (0.9 per cent of GDP) has enthused the gold and jewellery industry.
Gold imports were at $5.3 billion during the quarter ended March 2014 compared to the preceding quarter’s $ 15.8 billion.
In July 2013, the previous government imposed restrictions on gold import including a 10 per cent import duty and an 80-20 scheme mandating gold importers to export 20 per cent of imported gold.
RBI has already set the ball rolling last week to rectify the situation when it allowed large private gold importers to resume import of gold and allowed nominated banks to give gold metal loans to jewellery manufacturers.
The gold and jewellery industry is now hopeful that the encouraging trend of decreasing CAD will prompt the government to soon cut back on the import duty as well.
Mohit Kamboj, President, India Bullion & Jewellers’ Association (IBJA), is confident that the government would heed the industry’s concerns. “The 10 per cent duty on gold should come down mainly to combat the scourge of smuggling. Already premia are down and I am very sure this government will act positively in the coming days to address our concerns,” he told this correspondent.
According to Crisil Research, “In fiscal 2015, we now expect CAD to widen to $47 billion (2.2 per cent of GDP) as restrictions on gold imports, imposed since July 2013, are gradually withdrawn.”
“Why should any opportunity be given to those involved in the parallel industry?’’ said Pankaj Parikh, vice-chairman, Gem & Jewellery Export Promotion Council (GJEPC) said. “We have placed great faith in this government and they will surely address our concerns at the earliest.’’
