The Reserve Bank on Wednesday eased gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.
The Reserve Bank of India (RBI) in July last year had imposed severe restrictions on gold imports in order to check the burgeoning current account deficit and sliding rupee.
The central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks only and other entities were barred from importing the metal.
“Star trading houses/premier trading houses (STH/PTH), which are registered as nominated agencies by the Director General of Foreign Trade (DGFT), may now import gold under 20:80 scheme,” RBI said in a notification.
Under the 20:80 scheme an importer has to ensure that at least one—fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use.
The decision to ease the restriction follows representations from jewellers, bullion dealers, banks, and trade bodies.
“Taking into account such representations and in consultations with the Government of India, it has been decided to modify the guidelines for import of gold by the nominated banks/agencies/entities,” the RBI said.
The revised guidelines have come into force with immediate effect. The eligible premier trading houses, however will have to follow certain conditions.
As part of easing curbs, the central bank in March had allowed five more banks to import gold under 20:80 scheme.
The CAD, which had touched a record high of $88.2 billion or 4.8 per cent of GDP in 2012—13 is estimated to have come down to below $32 billion or 1.7 per cent of GDP in 2013—14.
The rupee has strengthened to sub-59 level against dollar from a high of nearly 69 in August 2013.