The sharp drop in India’s current account deficit (CAD) in the third quarter of 2013-14, led by a drop in gold imports, has prompted the gold and jewellery sector to renew demands for a roll back on gold restrictions.
The Reserve Bank of India (RBI), on Wednesday, said CAD dropped to $4.2 billion in the third quarter of 2013-14 ($31.9 billion in Q3 FY13) with gold imports leading the drop, falling to $3.1 billion ($17.8 billion).
The restrictions include a 10 per cent import duty and an 80:20 scheme, requireing importers to export a fifth of the gold imported. Gold lobbies want the easing of restrictions as India imports all its gold requirements. It was the world’s leading consumer till restrictions last year let China overtake it.
India Bullion & Jewellers Association (IBJA), a nodal body, formerly Bombay Bullion Association, called for a strike on March 10 to protest against the government’s ‘anti-business’ policies.
“It will be a token strike to protest against restrictions and the unnecessary harassment of trade by authorities,” Nilesh Gupta, Chairman, Administrative Committee, IBJA, told The Hindu.
To combat smuggling, authorities had conducted raids on dealers asking them to prove the source of their physical gold which the industry considers high-handed. Smuggling is estimated at 1-3 tonnes a month.
In view of the impending elections and with the ModeCode of Conduct in place, IBJA does not expect a roll-back “but we must express our displeasure as the authorities have a very negative attitude towards us,” Mr. Gupta said.
Harish Soni, Chairman, All India Gem & Jewellery Traders’ Federation (AIGJTF), said supply was a major issue with customs not clearing stock for weeks.
AIGJTF with more than 250 associate bodies will support the strike which, Mr. Soni estimated, would lead to loss of business of around Rs.1,000 crore. The industry size was around Rs.400,000 crore, he said.