Gold imports drop for FY14, govt rules out duty cut

The government does not have any current proposal to cut the record 10 per cent import duty on gold, Minister of State for Finance Nirmala Sitharaman said on Friday. This even after gold imports in 2013-14 fell by 25 per cent over the previous fiscal.

Gold imports in 2013-14 stood at 638 tonnes and the value of imports was Rs 1.60 lakh crore.

Desperate to trim a gaping current account deficit , the government took a slew of measures last year, to curb demand for bullion, its second-biggest import after oil. A sudden spurt in gold import in the beginning of 2013 had led the government to hike import duty on the precious metal to 10 per cent in phases.

High gold imports had pushed up the current account deficit to $ 88.2 billion or 4.7 per cent of GDP in 2012-13, which had been brought down to $ 32.4 billion or 1.7 per cent in 2013-14.

Besides the duty imposed by the finance ministry, the Reserve Bank of India also imposed restrictions. One such restriction was the 80-20 rule, which mandates linking of imports to exports to prevent outflow of foreign exchange. The rule requires a fifth of all bullion imports to be re-exported.

GOLD IMPORTS AND SMUGGLING

The quantity of gold imported in 2012-13 was 845 tonnes and in 2011-12 it was 919 tonnes, the minister said in a written reply in the Lok Sabha.

"In the April-June period of current fiscal, the quantum of gold import stood at 221 tonnes while in value terms it was Rs 54,792 crore," she said.

The value of gold imported was at Rs 2.28 lakh crore during 2011-12, Rs 2.45 lakh crore in 2012-13 and Rs 1.60 lakh crore in 2013-14.

Sitharaman said the cases of gold smuggling had gone up in 2013-14 at 2,441. In 2012-13 and 2011-12 the number of such cases stood at 869 and 500 respectively.

The government and the Reserve Bank had also imposed certain other import restrictions to prevent outflow of foreign exchange, adding to instances of smuggling.

Sitharaman said the Central Board of Excise and Customs (CBEC) had communicated to all field formations to keep a close watch on the trend of smuggling of gold. "Other intelligence agencies, like the DRI are also keeping a close watch on gold smuggling," she said.