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India is importing lower quantities of gold despite a recent move to ease curbs as bullion banks and traders await clarifications on new import policies, market sources said.
The world's second-biggest bullion buyer scrapped a rule late last month mandating traders to export 20 per cent of all gold imported into the country, even as the market was expecting it to tighten the curbs.
But customs officials, awaiting directions from the Reserve Bank of India on the new import procedures, were not clearing fresh imports, prompting importing agencies to hold back, traders said.
"Banks are holding back because we are waiting for clarification on the new rules from RBI and customs," said a trader with a top bullion bank in India.
"Customs officials are not clearing fresh imports as they are waiting for instructions. There is no point in importing now and having gold stuck with them."
Struggling with a high trade deficit, India last year imposed a record 10 per cent import duty on gold and the so-called 80-20 rule to limit purchases.
The export rule had triggered changes in the way imports were cleared, requiring firms to show proof of exports. The reversal of the rule will likely require more changes.
Traders had expected clarifications to the 80-20 rule earlier this week, but there have been none yet.
Another reason for the lack of strong imports is the adequate supply of bullion in the market.
Anticipating tighter rules, dealers had stocked up in the previous months, with imports likely to have crossed 100 tonnes for a third straight month in November.
"Imports in December are going to be less than that because people are waiting for clarification," said Bachhraj Bamalwa, director at All India Gem and Jewellery Trade Federation.
Consumer demand has also weakened because of the slowdown in the number of weddings, with demand expected to pick up again after mid January, Bamalwa said.
Gold prices in India were either flat or at a small premium of $2 an ounce, down from last week's $5, traders said.
"There is no incentive to import at low premiums and there is enough supply in the market," said another trader at a bank.
Elsewhere in Asia, buying was steady as gold prices moved higher.
Premiums in top consumer China ranged between $1 and $2, while in Hong Kong and Singapore, they were unchanged at a little over $1.
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