The government is considering relaxing gold import restrictions following easing of concerns on trade and current account deficits, even as it is monitoring on a daily basis the price situation of onions, milk, wheat and pulses for export curbs on account of possible below-normal monsoon.
The restrictions on gold imports imposed last fiscal have hurt gems and jewellery exports, which recorded just 1.36% growth to $3.43 billion in May.
Commerce secretary Rajeev Kher told reporters that his department had discussed the issue with the finance ministry. “There is a need to rationalise (gold import) duty and (gold import) procedure. We have already made it clear that is a need to look at the current gold import regime," he said.
He added that the 80:20 rule of the government should be simplified so that gold can easily be sourced to be used as input for exports. “If you feel the initial concerns of CAD are fully addressed, as we hope to in the next several months, then there will be a reason to restore, or at least to some extent, the (earlier) position (on gold imports). There is a clear perception that there could be something that has to be done. It will happen in the Budget if it has to happen," Kher said.
Under the 80:20 scheme last August, nominated agencies were permitted to import gold with the rider that a fifth of the imports will be exported. The gems and jewellery sector has been demanding easing of import curbs. The RBI last month relaxed gold import norms by permitting some trading houses, in addition to certain banks, to procure gold to boost exports. Imports of the yellow metal shrunk 72% to $2.19 billion in May due to the curbs.
Asked about possible restrictions on agri exports, Kher told reporters: “Our approach to agri exports is broadly nuanced by the fact that agri exports, as far as possible, should be open, but clearly they are underlined by the attenuating factors of domestic demand and supply.”
Pointing out that the government has already reviewed the situation, Kher said there was no concern on account of “wheat and rice” as of now. However, he added: “Onion and milk are important. We are very closely observing the price trend and whenever, if required, appropriate action will follow. We are observing the prices (of onion and milk) at wholesale and retail level and the trend over a week.”