Why the endless control and restrictions over gold imports?

Business

oi-Sunil

By Sunil Fernandes

Published: Wednesday, September 18, 2013, 8:54 [IST]

Since the current account deficit shot up, the government and the RBI have applied so many mechanisms to control gold imports, that even the industry is left confused. High gold imports of course have been one of the reasons for the current account deficit shooting up and the rupee falling.

But, one has to avoid measures almost every week that leaves industry and individuals confused.

Exactly, a day after RBI tightening norms for gold loans companies, the government adds another one.

The latest is the import duty on jewellery "To protect the interests of small artisans, the customs duty on articles of jewellery and of goldsmiths' or silversmiths' wares and parts thereof is being increased from 10 per cent to 15 per cent," an official statement said.

Of course, the above measures were aimed at protecting the domestic artisans, but, in the first place one is trying to curb gold imports and also liberalising things at the same time.

Already import duties on gold bullion have been raised three times this year. In August, the government banned imports of coins and medallions and asked domestic buyers to pay in cash for imports. In the same month it raised import duty on gold for the third time.

In July the RBI tightened gold imports, and said it would remain dependent on export volumes. In the month of June there were a series of measures and developments again including a hike in import duty.

In May, the RBI restricted the import of gold on a consignment basis for banks.

Agreed, that the rupee has gone into a tailpsin and we need to control gold imports and hence the series of measures.

But, it would be good for the industry and consumers, if policies remain stable to take into account the currency and the high current account deficit that the country is running. Frequent change in policies is neither good for consumers nor the industry.

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