Reserve Bank of India (RBI) had on July 22 made it mandatory for banks and authorised agencies to export 20% of the gold that they import from foreign countries.
The impact of this ruling has been immediate and severe.
Gold import at Ahmedabad has plummeted to a mere 147kg in August (as on August 30), down from 9 tonnes (9,000kg) of gold that was imported at A’bad airport in July. Traders believe imports will not increase till clarity is not achieved on the new rule imposed by the apex bank.
“This (almost-zero gold import) was bound to happen. The earmarking a fifth of imports for exports is too much to ask for,” said Girish Choksi, a city-based bullion trader. “Demand for bullion has fallen and thus, there is no shortage (of bullion) in the market,” he added.
The 147kg gold, in fact, landed in Ahmedabad only because a buyer in the state had a prior commitment, said Samir Mankad, director of GSEC Ltd – the international cargo handling agency at Ahmedabad airport.
“The gold import has been zero in Ahmedabad since July 22. The single consignment (of 147kg) arrived only because it was ordered before RBI imposed the new rule,” said Mankad.
The weakening Indian currency, which should aid more exports, isn’t helping matters either. Traders do not have enough orders to match the 20% export criteria set by RBI.
“They (exporters) should take advantage of a weak rupee, but exports have remained stable. RBI’s directive hasn’t triggered export of gold jewellery from Gujarat,” said Mankad.
President of Gems & Jewellery Trade Council of India, Shanti Patel, believes gold imports will draw a naught till RBI and the Centre establish clarity in the export-import parameters.
“With a burgeoning current account deficit (CAD) and weakening currency, curb on gold imports was necessary. But there are other means by which the government can control CAD,” said Patel.