The All India Gem and Jewellery Domestic Council (GJC) has said that the only effective way for Indian gold imports to be reduced was the implementation of a comprehensive integrated gold policy that would liberalise and simplify gold monetisation schemes that enabled the recycling of household gold for new jewellery manufacture. The GJC has sought an immediate rollback in the hiked import duty of gold from 12.5 to 10 percent.
The GJC sought government action in this regard to rescue the gem and jewellery industry and protect the jobs of the 5.5 million people engaged in it.
The GJC said its recommendations have been echoed by the India Gold Policy Centre (IGPC) set up by the Indian Institute of Management at Ahmedabad, which notes that a comprehensive and integrated gold policy will usher in key reforms such as the establishment of a Gold Board and the advent of bullion banks.
The IGPC said that bullion banking would enable banks to source locally, finance the bullion and refining business, and finance refineries to import dore or unrefined gold. It would also allow them to hedge their positions on Indian exchanges, create gold-backed products that help reduce dollar outflows and export refined bullion.
The GJC has also urged the government to immediately implement the Gold Monetisation Scheme (GMS) and make it more effective to benefit citizens at large. The scheme was first launched in 2015-16 and updated by the Reserve Bank of India at the start of this year. The scheme is aimed at bringing back into circulation, the estimated 24,000 tonnes of gold held in private hands in India.
Bringing this gold to market would immediately reduce gold imports and thus reduce the country’s current account deficit (its trade deficit), the GJC maintains.
GJC Chairman Anantha Padmanabhan commented, “The government should rollback the increased gold import duty until the revised Gold Monetisation Scheme is implemented, as that is the only feasible method to reducing gold imports.”
Industry stakeholders have pointed out that the current account deficit had narrowed in 2019, adding that reducing the import duty would abate the worry of an increase in gold smuggling.