Mohit Kamboj celebrates as Modi magic unfolds; RBI relaxes gold import norms

events and awardsEven before Narendra Modi swears as 16th Prime Minister of India, the positive wave has already swept the gems and jewellery industry. The Reserve Bank of India (RBI) on May 21 erased gold import norms by allowing select trading houses, in addition to already permitted banks, to procure the precious metal to boost exports.

India Bullion and Jewellers Association (IBJA) President, Mohit Kamboj invited the directors and members of the association to rejoice the positive move in the gems and jewellery industry. Kamboj said, “RBI had earlier imposed severe restrictions on gold imports to check the burgeoning current account deficit and sliding rupee. Further, the central bank had tied imports with exports and prescribed a 20:80 formula. This facility was available to select banks only and other entities were barred from importing the metal. RBI notified that Star trading houses/premier trading houses (STH/PTH), which are registered as nominated agencies by the Director General of Foreign Trade (DGFT), may now import gold under 20:80 scheme.”

Under the 20:80 scheme an importer has to ensure that at least one fifth, or 20 per cent, of every lot of imported gold is exclusively made available for the purpose of exports and the balance for domestic use. The decision to ease the restriction follows representations from jewellers, bullion dealers, banks, and trade bodies. Taking into account such representations and in consultations with the Government of India, it has been decided to modify the guidelines for import of gold by the nominated banks/agencies/entities, the RBI said.

Kamboj was happy to announce that revised guidelines have come into force immediate effect. The eligible premier trading houses however will have to follow certain conditions. As part of easing curbs, the central bank in March had allowed five more banks to import gold under 20:80 scheme. “Post the announcement the premiums have gone down considerably and spiking rates of gold are also coming down. We expect the premiums to be completely erased in next 15-20 days,” says Kamboj.

Adding to the excitement, he said that he is positive of NDA coming into power. He further requested NDA to reduce the custom duty reduced to 2-3 per cent from 10 per cent. Kamboj said, “I would like to congratulate NDA for their work and for reviving a business friendly atmosphere once again for the gems and jewellery industry. The golden days of the industry are going to be back.”

Entire industry rejoiced the RBI move and expected this move will revive the dooming gold business and shall curb the smuggling of gold as well. IBJA members also urged that 20:80 scheme should exist as it will encourage export of gold in the country. Kambij adds, “The 20:80 policy is not bad. The policy needs to be amended.” He sees gold demand getting better after July as gold prices are expected to fall further.