Members from the Indian jewellery industry have welcomed the government’s decision to lift a restriction on the country’s gold imports.
In a statement issued on Friday 28 November, the Reserve Bank of India announced, “It has been decided by the Government of India to withdraw the 20:80 scheme and restrictions placed on [the] import of gold…with immediate effect.”
The 20:80 scheme referred to a restriction imposed by the Indian Government in August 2013 that mandated 20 per cent of all gold imports would be reserved exclusively for export purposes, while the other 80 per cent would be made available for domestic use.
It was said the scheme was introduced in order to reduce India’s current account deficit (CAD), as the country had been importing more goods than it had been exporting. However, while the CAD reportedly did improve, it was widely reported that the reduction in imports of the metal had resulted in an increase in gold smuggling.
Colin Shah, jewellery panel committee convenor of India’s Gem & Jewellery Export Promotion Council (GJEPC), commented, “The withdrawal of this scheme is good for the industry and good for the country. The smuggling will stop and it will introduce transparency.”
Although an official GJEPC release stated, “for the moment, the jewellery industry views the withdrawal of the…scheme as a positive step”, it was also noted that the industry was still unclear on whether the government would replace the scheme with additional gold import rules and restrictions.
“Industry insiders feel that it is likely that the government will watch the gold import trends for a few months and their impact on CAD before taking the next step,” the release read.
India is reported to be one of the top three gold jewellery-exporting countries in the world. The country also regained its position from China as the world’s largest gold market in the third quarter of 2014, according to a recent report by the World Gold Council. Jewellery demand increased 60 per cent to 183 tonnes for the period – its second highest third quarter result on record.
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