Press Trust of India
NEW DELHI, 22 JULY: Gold may get costlier after the Reserve Bank of India (RBI) made it mandatory to export 20 per cent of imports in a bid to arrest the rupee’s fall and improve the current account deficit (CAD), traders and jewellers said today.
While exporters hailed the RBI’s move, bullion traders and retail jewellers expressed concern that gold could get costlier for both jewellery makers and consumers. “As the government has made it mandatory to export 20 per cent of imported gold, the exporter will be under pressure to export at any given price. If there is any export loss, the exporter will try to recover it from domestic sales,” Bombay Bullion Association ex-President Suresh Hundia said. Exporters will recover export losses by selling gold at a higher premium to local jewellery makers, who will further pass it on to consumers, he explained.
The RBI measure will lead to a rise in gold prices for both jewellery makers and consumers, Hundia said.
Welcoming the move, Gitanjali Group Managing Director Mehul Choksi said: “It is a fair offer to retain 20 per cent of imported gold for export purpose as this would help address the CAD situation and strengthen the rupee value.”
“Nearly $3-5 billion worth of gold is being imported in cash every month. In July, over $3 billion gold has already been imported. The import of gold in cash is hurting the rupee badly,” Mr Choksi said.
Gems and Jewellery Export Promotion Council Chairman Vipul Shah said: “The ratio of 80:20 is a welcome step to promote exports and address the CAD situation.
“It means 80 per cent of imported gold would be available for domestic use, while 20 per cent would be exported. This step will boost exports and foreign revenue,” he said.
In 2012, the country imported 970 tonnes of gold, of which 70 ton, or 7 per cent, were exported.
“The RBI measure will bring down imports to 500 tonnes and boost exports to at least 100 ton this year,” Mr Shah noted. “There will not be any shortage of gold for domestic use. There will be some impact on prices.”
India is the world’s largest gold consumer. Gold prices rose by Rs 390 to Rs 27,680 per 10 grams in the National Capital today.