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Wednesday, August 14, 2013

Govt bans gold coins, medallions imports to curb deficit

Governmental imposed restrictions on private money flows by any other name are still CAPITAL CONTROLS, and a robbing of liberty and commerce to benefit the state.

By PTI | 15 Aug, 2013, 01.22AM IST

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NEW DELHI: Seeking to reduce the import of gold, the Reserve Bank today prohibited inward shipment of gold coins, medallions and dores without license.
Gold coins and bars constituted about 36 percent of
total demand in 2012. Total gold imports rose to 47.6
tonnes in July.

"From now onwards, import of gold in the form of coins and medallions is prohibited and henceforth all import of gold in any form or purity shall be subject to a licence issued by DGFT prescribing 20-80 scheme," Economic Affairs Secretary Arvind Mayaram told reporters here.

The latest measures are part of the series of steps taken to curb gold import, the single biggest contributor to the widening Current Account Deficit (CAD).

After a dip in June, gold imports again surged in July with 47 tonnes of inward shipments compared to 31 tonnes in the previous month.

Import of gold in April-July rose 87 per cent to 383 tonnes.

He said it shall be incumbent on all nominated banks, agencies and other entities to ensure that at least one-fifth, or 20 per cent, of every lot of import of gold is exclusively made available for the purpose of exports and the balance for domestic use.

It has further stipulated that nominate banks, agencies and other entities shall make available gold for domestic use only to the entities engaged in jewellery business, bullion dealers and banks authorised to administer the gold deposit scheme against whole upfront payment.

Also importers will be required to make full upfront payment for the shipments.

"Gold dore imported will also be subjected to the discipline and it would be monitored at the refinery level.

"The gold which is extracted by refining gold dore, only 80 per cent of that would be provided for domestic use, 20 per cent has to be exported and similarly proof of export has to be shown before the next consignment is imported," Mayaram said quoting RBI notification.

Under the scheme, any gold that is imported will have to be imported into custom bonded warehouse. Out of the imported gold, 80 per cent can be given to domestic users of the designated kind and 20 per cent must go to exporter.

"The refinery shall make available for domestic use only to the entities engaged in jewellery business/bullion dealers and to the banks authorised to administer the Gold Deposit Scheme against full upfront payment and sale of gold against any other form of payment shall not be permitted.

"Further, the import of gold dore is permitted only against a licence issued by DGFT," the RBI said.

Source: EconomicIndiaTimes