Stringent import duties levied by Reserve Bank of India (RBI) had curtailed gold imports at the city airport to a mere 174kg but in the process, has spurred smuggling of the yellow metal.
About 100kg of the bullion is being smuggled into Ahmedabad every day to match the unabated demands of the Indian consumers. In rupee terms, 100kg of gold (as on September 7) costs about Rs31.10 crore, which effectively means Gujarat is consuming about Rs930 crore worth of smuggled gold every month.
“In normal market conditions, 500kg of gold is consumed every day by jewellers and consumers. Demand no doubt has come down but people are still buying,” said a leading gold importer of the city, on condition of anonymity. “Assuming 250kg is still being consumed daily, about half of it certainly would have been smuggled, as there have been no legal imports in the last month.”
A leading jeweller also asserts that there is no scarcity.
“Consumers are able to buy whatever quantity they need.
Goldsmiths are getting the bullion as and when needed in the spot market. This means there is a steady inflow of gold into the market,” said the jeweller.
The steady demand can also be courtesy those investors who bought gold at cheaper rates in June and July and who are now offloading their stock. “There is some supply from investors. The recycled (buying new gold in exchange of old) supply is also robust. This however isn’t sufficient to meet the demand,” said the jeweller.
The RBI had recently increased imported duty to 10% and issued circular directing gold importers to set aside 20% of each of their consignment for export.
The apex bank, had on July 22, said: “At least one-fifth of every lot of import in any form and purity is exclusively made available for the purpose of export. Such imports shall be linked to financing of exporters by the nominated agencies… They will be required to retain 20% of the imported quantity in the customs-bonded warehouses.”
The impact was immediate. Importers stopped their operations on issues of ambiguity and discrepancies in the RBI rules. According to data from the air cargo complex, 174kg of gold was imported at Ahmedabad airport between July 22 and August 28.
Import in May stood at 37.61 tonne and 3.73 tonne in June.
The finance ministry and Central Board of Excise and Customs (CBEC) are working on issues relating to the implementation of the RBI circular. “We had an inter-ministerial meeting on the issue of the circular. CBEC has issued a circular that clears the picture and import is likely to resume,” said AK Gupta, commissioner of customs, Ahmedabad.