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India's largest gems and jewellery federation has proposed its members curb sales of gold coins and bars in an effort to prevent the government from imposing import restrictions on gold after an increase in inbound shipments.
India, the world's second-largest gold buyer, is likely to announce some new measures to rein in gold imports which might include restrictions on a group of private trading firms.
Officials from the finance ministry and Reserve Bank of India (RBI) were considering whether to re-impose import restrictions on "star trading houses" that were eased earlier this year, a source said this week.
Sales of gold coins and bars should be curbed after reaching around 300 tonnes in 2013, All India Gems and Jewellery Trade Federation (GJF) said in a statement on Wednesday.
"The federation has estimated total imports in 2014 at about 850 tonnes of which the demand for coins/bars would remain around 200-250 tonnes," said Bachhraj Bamalwa, director GJF.
The federation had requested a curb on sales of gold coins and bars a year ago, when total imports were around 900 tonnes.
Bamalwa is expecting gold imports in October to be around 108 tonnes as compared with 95 tonnes a month earlier.
Gold imports in October jumped fourfold from a year earlier to $4.18 billion, raising concern about India's fragile balance of payments.
"The gold, which is being imported is purely used for manufacturing jewellery and not for investment purposes," said GJF Chairman Haresh Soni.
Jewellery demand in India surged 60 per cent in the third quarter, but investment demand eased 10 per cent, according to the World Gold Council.
Struggling with a high trade deficit, India last year raised its gold import duty to a record 10 per cent and made it mandatory to export a fifth of all bullion imports.
The trade body has also urged the government to reduce the duty on gold to 2 per cent to make smuggling unprofitable.
The World Gold Council has estimated about 200 tonnes of gold will be smuggled into India in 2014, versus 150-200 tonnes last year.
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