The new measures announced by the Reserve Bank of India (RBI) to further curtail gold imports and control the high current account deficit (CAD) have elicited a mixed response from the jewellery industry.
Late Monday, the RBI announced new rules for gold importers stipulating that authorised gold importers like banks and gold trading agencies must ensure that at least 20 per cent of every lot imported “is exclusively made available for the purpose of export”.
Pankaj Parikh, Vice Chairman, Gem & Jewellery Export Promotion Council (GJEPC), told The Hindu that “To take on the high CAD, the way forward is to either restrict gold imports or increase exports. Restricting imports, as we saw in the April-July 2013, resulted in gold imports practically doubling over the previous year, rendering the ban on consignment imports ‘toothless’. Exporters and jewellers want a continuous, assured supply of gold and no exporter should be deprived.’’
Suresh Hundia, President-Emeritus, Bombay Bullion Association, felt steps such as these would give an export bias to Indian jewellery industry.
“If you want to sell in the domestic market, you will have to export, and this could lead to export under-costing and earning more from imports. There are financing problems. While authorities are understandably worried about imports, there could be an undesirable rise in smuggling,’’ said.
There is at present no incentive for exports as the international scenario is not favourable, and there are issues regarding payments, according to Haresh Soni, Chairman, All-India Gem & Jewellery Federation (AIGJF). “Exporters get finance at higher costs, and how would they be globally competitive,” said Mr. Soni adding that the domestic industry too would be hampered and smaller retailers and manufacturers would have to pay a hefty premium for gold supply.
He said jewellery exports last year stood at around 70 tonnes. These were unlikely to be surpassed this year as “the international scenario is not favourable for exports. However, we have suggested measures to mobilise idle gold in the domestic market.
“The Indian public should be incentivised and the commitment must be there to get back gold against gold in future”.