India’s gold imports to restart next week
Indian banks and trading agencies are expected to resume gold imports as soon as possible, following a two-month holdup because of confusion over an amendment in the import procedure rule.
Last July, the Reserve Bank of India asked banks and dealers who import the precious metal to ensure that 20% of their imports were re-exported.
Due to the ambiguity on how the government expected them to meet such requirement, banks and state-run trading agencies practically halted gold imports since mid-August.
At the same time, India banned the sale of gold coins, medallions and dores without a licence from the foreign trade office in an extreme effort to curb gold imports.
As a consequence, August imports of bullion fell to $650 million. That was a massive 70% decrease from July's $2.2 billion figure.
"The confusion was mainly about the 80:20 norm. Many people misread this. This means at least 20% of imported gold must be exported," the trade ministry source told Reuters.
India, the world's No.1 gold consumer, imports nearly all the yellow precious metal it consumes. Only banks and trading agencies designated by the government are authorized to import bullion.
According to some estimates, Indian households are hoarding close to 20,000 tonnes of gold worth some $1 trillion, representing 50% of the country's GDP.