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The Reserve Bank of India (RBI) allows refiners to import gold dore

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No plans to roll back gold import curbs: FM P. Chidambaram
No plans to roll back gold import curbs: FM P. Chidambaram

The Reserve Bank of India (RBI) has allowed gold refiners to import dore up to 15 per cent of their gross average viable quantity, based on their licence entitlement in the first two months, for making this available to exporters on a first-in first-out basis. The quantum of gold dore to be imported should be determined lot-wise, on the basis of export performance, RBI said.

Till now, dore import was banned and gold refineries were sourcing their input from scrap gold. Gold jewellery manufacturers have welcomed the move.

“It’s a welcome move by RBI, which will increase domestic refinery capacity and ease supply for domestic jewellers and exporters that are suffering because of short supply of gold. It will also reduce smuggling of gold into India,” said Pankaj Parekh, vice-chairman, Gems & Jewellery Export Promotion Council.

RBI has opened a new window for raw material import, but the central bank has mandated that up to 80 per cent of the import can be used domestically, before the next import. “The imports, thereafter, shall be allowed only up to five times the quantum for which proof of export has been submitted. This shall be on accrual basis,” RBI said.

The dore so imported should be released based on a first-in first-out basis, following the 20:80 principle, the banking regulator said.

RBI and the government had imposed several restrictions on gold consumption, including raising  import duty, when the current account deficit (CAD) touched a record high of 4.8 per cent of GDP last year. At that time, RBI had mandated imports of the precious metal against suppliers’ or buyers’ credit would be on 100 per cent cash margin, and on a document against payment basis.

Following the measures, CAD for the second quarter of FY14 fell to 1.2 per cent; it is expected to be below three per cent in the current financial year.

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