Gold imports rise again in January, restrictions likely to continue

Gold imports have started increasing again and rose to 38 tonnes in January, from a low of 3 tonnes in August, which may  prompt the Reserve Bank of India (RBI) and the government to continue with the restrictions on its inward shipments.

The central bank's guidelines and the import duty hike to 10 per cent by government were prompted by the surge in import of gold, which had crossed 300 tonnes in April and May, and significantly contributed to the widening Current Account Deficit (CAD).

According to the data, gold imports had touched a low of 3.38 tonnes in August, after the RBI came out with the restrictive 80:20 norm, under which gold imports were allowed only after exporting 20 per cent of the inward shipment.

Gold imports rose in December to 25 tonnes, higher than 19 tonnes in the previous month, mainly on account of wrong interpretation of the RBI's 80:20 scheme, sources said.

The unexpected increase in gold imports in the two consecutive months - December and January - forced RBI to issue a clarification earlier this month saying that the nominated banks and agencies will not be allowed to import in excess of their entitlements in first or second lot under the 80:20 scheme.

"Import of gold in the third lot onwards will be lesser of the two - five times the export for which proof has been submitted or quantity of gold permitted to a nominated agency in the first or second lot," the RBI notification said.

In view of the representation being received by the RBI and the finance ministry, the central bank has said that the quantum of the third lot of import would be five times the export from the previous lot subject to the condition that it would not exceed previous entitlements.

The government is hopeful of bringing down the CAD to $45 billion in current fiscal ending March, from $88.2 billion in 2012-13.