Cheer may be back for gold lovers as premium dips 82%
KOLKATA: Ahead of the festive season, there is some good news for Indian consumers. Premium on gold has declined in India by almost 82% to $7 per ounce from as high as $40 per ounce as imports have kicked off after a gap of two months.
The customs authority in Kolkata has just cleared consignments of gold, raising hopes for jewellers and bullion dealers in Mumbai's Zaveri Bazar and south India for smooth imports of yellow metal just before Navratri, which begins on October 5.
Confirming the development, Pankaj Parekh, vice-chairman of Gem & Jewellery Export Promotion Council, said: "The customs authority has cleared gold consignments of banks last week. The Kolkata-based exporters have received gold from these consignments. In fact, I have personally got some 100 kg of jewellery exported after I got gold last week." The Reserve Bank of India (RBI) on July 22 introduced the 80:20 scheme, under which 20% of the total gold imports was to be exported back.
Further imports were not allowed if this 20% norm is not met by importers. The move was to curb rising gold import, which led to high current account deficit. However, the RBI norm left many confused, leading to imports being held up at customs. India's gold imports in August fell to $0.65 billion from $2.9 billion in July and a record $8.4 billion in May. Gold traders had several rounds of meeting with the RBI and customs authorities to put an end to this confusion.
"We had a round of talks with the RBI last week too, where officials from Nova Scotia Bank whose consignments have been held up at the customs, were also present. We are hoping that imports will resume before Navratri. Demand generally starts from Navratri period and continues till December-January. November-January is the wedding season in India when lot of purchases take place," said Haresh Soni, chairman, All India Gem & Jewellery Trade Federation.
Imports of the yellow metal will also boost exports, which had fallen by 68.18% between April-August to 18,826.48 crore from 48,072.76 crore in the corresponding period of the previous year. Exports usually total only about 60-70 tonne per year and compete for markets from the Middle East to the United States.
A drop in premium will help prices to climb down a bit.
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