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22 May 2014
India eases gold import controls
FXStreet (London) - Overnight, the Reserve Bank of India released a statement that it would be easing restrictions on the import of gold with immediate effect.
The loosening of controls counters some of the restrictions imposed last year by the RBI in a more to try to slow the country’s current account deficit. Under the controls 20 percent of imported gold had to be made available for export products, while the remainder could be used domestically. This facility was made available only to banks, with other agents barred from importing the metal.
Following yesterday’s announcement, the restriction on other parties importing gold will be eased.
In the statement, the RBI said:
“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
a. The STH/PTH should have imported gold prior to the introduction of 20:80 scheme. STH / PTH should get the required verification done by the Department of Customs at any port where they have imported gold consignment in the past.
b. The first lot of gold under this scheme would be based on the highest monthly import during any of the last 24 months prior to the RBI’s notification dated August 14, 2013, subject to a maximum of 2000 Kgs.
c. As in the case of other nominated agencies, the eligible quantity may be imported by STH / PTHs from any port, subject to their eligibility limit / maximum quantity allowed to them.
d. For proper compliance, before import, they must submit the import plan, port-wise and quantity-wise, to the concerned Customs office, where the verification of the figures of past performance was done. This information will be sent to all the other ports from which imports are permitted. The overall discipline of exporting 20% of each imported consignment before the next consignment is imported will be equally applicable to such STH/PTH importers."
Unlikely to cause a significant shift in gold prices
The changes are unlikely to have a significant effect on spot gold prices. While it is anticipated that it will lead to a doubling of gold imports, it is starting from a historically low base.
The changes may play a part in a longer-term appreciation of the rupee, aided by structural reforms expected to be brought in by the new government.
The loosening of controls counters some of the restrictions imposed last year by the RBI in a more to try to slow the country’s current account deficit. Under the controls 20 percent of imported gold had to be made available for export products, while the remainder could be used domestically. This facility was made available only to banks, with other agents barred from importing the metal.
Following yesterday’s announcement, the restriction on other parties importing gold will be eased.
In the statement, the RBI said:
“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
a. The STH/PTH should have imported gold prior to the introduction of 20:80 scheme. STH / PTH should get the required verification done by the Department of Customs at any port where they have imported gold consignment in the past.
b. The first lot of gold under this scheme would be based on the highest monthly import during any of the last 24 months prior to the RBI’s notification dated August 14, 2013, subject to a maximum of 2000 Kgs.
c. As in the case of other nominated agencies, the eligible quantity may be imported by STH / PTHs from any port, subject to their eligibility limit / maximum quantity allowed to them.
d. For proper compliance, before import, they must submit the import plan, port-wise and quantity-wise, to the concerned Customs office, where the verification of the figures of past performance was done. This information will be sent to all the other ports from which imports are permitted. The overall discipline of exporting 20% of each imported consignment before the next consignment is imported will be equally applicable to such STH/PTH importers."
Unlikely to cause a significant shift in gold prices
The changes are unlikely to have a significant effect on spot gold prices. While it is anticipated that it will lead to a doubling of gold imports, it is starting from a historically low base.
The changes may play a part in a longer-term appreciation of the rupee, aided by structural reforms expected to be brought in by the new government.