The hopes of easing gold (COMEX:GCJ14) import norms lost color as C.Rangarajan, Chairman, Prime Minister’s Economic Advisory Council declared that the existing duties and norms of gold imports into India were quite reasonable. In an interview, he stated that the 10% import duty on gold is not high when compared to the import duty of other luxury goods. The statement has come as a dampener for the country’s bullion industry.
The lower-than expected gold import bills had helped to trim the Current Account Deficit (CAD) to 0.9% of the GDP during the December quarter. The gold import bill during the first three quarters totaled just $21 billion. The huge shrinkage in CAD had sparked hopes of gold duty rate cuts and relaxation of import norms. A bunch of analysts including Nomura, HSBC and BNP Paribas had also forecast relaxation of tight gold import norms by the government following the encouraging CAD data.
Meantime, the country’s Finance Minister, Mr. P Chidambaram had made clear that the norms would be revisited only after a thorough analysis of the Current Account Deficit (CAD) for the entire fiscal year 2013. He further had ruled out the likelihood of easing the norms prior to release of final CAD data.
However, the trade circles still believe that government may lower the gold import duty to 8% and provide some relaxations in the 80:20 rules by this month-end.