The Finance Ministry said it cannot lower its guard on the external front and ease gold import curbs as developments in Iraq and other countries can have adverse implications on the country's Current Account Deficit (CAD) situation.
"CAD problem has been contained but we have to be very cautious. International developments around Iraq and international currency volatility are there, we have to see forex inflows stabilise. Then only one can look at (easing of gold import curbs)," said revenue secretary Shaktikanta Das.
Ongoing geo-political conflicts in the Gulf and the other Middle Eastern countries, Das said can push up oil prices inflating the import bill, adding to pressure on the CAD.
"One has to wait before we make any changes. Things can go out of control, so one has to be cautious. Gold import curbs are in place. Situation is so fluid and volatile... CAD is still a concern. We are out of the problem, but we would like to wait and watch," he said.
CAD, which is the excess of foreign exchange outflows over inflows, touched a historic high of %88 billion or 4.7% of GDP in 2012-13, mainly due to rising imports of gold and petroleum products.
In order to check rising CAD, the government had raised import duties on the yellow metal to 10%, while RBI imposed curbs on import of gold and also laid down various pre-conditions for inward shipments of the precious metal.
It came down to $32.4 billion or 1.7% of GDP in 2013-14.
Finance Minister Arun Jaitley in Budget has refrained from lowering duties on gold despite demands from jewellery industry.