Gold News

India Tightens 80:20 Gold Import Rules

Defies analysts, industry and politicians by making gold imports harder ahead of elections...
 
GOLD IMPORT rules in India, the world's No.1 consumer nation overtaken in 2013 by China, have been tightened by the central bank.
 
The move defies widespread expectations of easier rules, by limiting new import licenses under the so-called 80:20 rule to the lower level of an importer's two most recent deals.
 
Launched in August 2013, and imposed ahead of last year's key gold-buying festival of Diwali, the rule states that 20% of any shipment must be re-exported before the rest can be released for domestic use.
 
Confusion over the exact meaning effectively closed India, which has no domestic mine output, to new gold imports, forcing internal prices as high as $150 per ounce above world benchmarks.
 
With importers granted 3 lots by their licenses, "Import of gold in the third lot onwards will [now] be the lesser of the [previous] two," said the Reserve Bank last week. Meaning the maximum third-lot imports will be "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."
 
Both of India's main political parties have this month backed some loosening of gold import rules ahead of May's national elections. Prime ministerial front-runner Narendra Modi of the opposition BJP made it part of his platform as long ago as September.
 
This week unnamed sources cited by the Reuters news agency said the current Congress Party government was considering a reduction in gold import duty from its historic record 10% to perhaps 8% or 6%.
 
The Gems & Jewellery Export Promotion Council (GJEPC) then urged the administration to cut gold import duty as low as 2%.
 
"We were looking forward to some relaxation on the 80:20 rule," specialist site Mineweb quotes one gold and silver dealer in Mumbai's famous Zaveri Bazaar, symbolic heart of India's huge bullion industry.
 
"We were promised this was in the works by government officials...[to] cut down on the surge in smuggling. These new norms are more stifling."

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