The Centre is unlikely to end the stipulation that requires a person importing gold to re-export 20 per cent of it in value-added form anytime soon, according to an official in the Department of Revenue, Ministry of Finance.
Also called the 80:20 scheme, it was imposed by the Government in July last year to curb imports of gold following imbalance in merchandise trade leading to current account deficit (CAD).
“We may come up with measures that will ease import procedures but the scheme will continue,” said Krishna Pratap Singh, Additonal Director, Directorate-General of Export Promotion.
He also ruled out any move to either scrap or cut the 10 per cent import duty on gold.
According to official sources, the Government’s thinking is that gold is being purchased only to be kept idle by consumers at home. Since idling of gold serves no purpose, it would be better to curb foreign exchange outgo on bullion purchase.
Sources said there are far more pressing issues that need to be attended to instead of thinking about facilitating gold imports. The Centre is more keen on ensuring trade balance and keeping the CAD under control.
Singh, when contacted on the sidelines of a gold seminar in Pune, said the Government was trying to work out solutions to make it easy for the bullion trade to import gold.
“The RBI has made changes in import of dores. We have also allowed more banks to import. This, in fact, has helped cut the premium that jewellers had to pay for gold,” he said.
Banks have also been asked to send electronic certificates on realisation (BRC). “We have now allowed Customs people to accept electronic BRCs,” he said.
The Government’s thinking comes on the heels of trade deficit rising to $10.83 billion in August with gold imports surging to $2.03 billion.
On the other hand, the bullion trade has asked the Government to recognise a body of its representatives to discuss its issues.
“Currently, the Centre is discussing our issues with the jewellery body which has no understanding of our problems,” said Satish Bansal, Managing Director, MD Overseas Ltd. “The 80:20 scheme has forced bullion traders to turn exporters,” he said.
According to Prithiviraj Kothari, Managing Director, Riddhi Siddhi Bullions, the Centre should replace the scheme with a quota or a licensing system like in China.
In China, only nine banks and some People Bank of China-owned coin companies have the right to import and export gold.
The bullion trade also wants the Customs duty cut gradually to 4 per cent. It has also urged the Centre to raise the gold brought by non-resident Indians to 5 kg.
Currently, male NRIs can bring in gold worth ₹50,000, while the limit for women is ₹1 lakh. Earlier, the limit was ₹10,000 for men and ₹20,000 for women.