Gold jewelers in India, the world’s second-biggest consumer, are planning a nationwide shutdown next week to demand easing of curbs on precious metal imports.
Bullion dealers and jewelers will shut shops on March 10 to protest restrictions on imports, Kumar Jain, a spokesman for the Bombay Bullion Association, said by phone. Jewelers want the import tax cut to 2 percent from 10 percent, relaxation in re-export rules and easier credit norms, he said. The association represents about 1,000 jewelers and traders.
India raised the tax on gold imports three times last year and linked shipments to re-exports to rein in a record current-account deficit and a slump in the rupee. The restrictions reduced overseas purchase and created a shortage, fueling domestic premiums to a record $160 an ounce over the London cash price in December. The South Asian country buys all its gold from overseas and made up for 25 percent of global demand in 2013, according to the World Gold Council.
The Commerce Ministry is in discussions with the Finance Ministry and the Reserve Bank of India about changing import rules, Minister Anand Sharma said in Mumbai today. Finance Minister Palaniappan Chidambaram said on Jan. 27 the curbs will be reviewed by the end of March only if Asia’s third-largest economy controls the current-account deficit.
The deficit, the broadest measure of trade, tracking goods, services and investment income, will narrow to $45 billion in the year ending March from a record $88 billion in 2012-2013, Chidambaram said Feb. 17. The shortfall was $5.2 billion in July through September, compared with $21.8 billion for the prior quarter, the RBI said Dec. 3.
Overseas purchases may total 550 metric tons this fiscal year and may remain below 600 tons in 2014-2015 if the curbs continued, according to Haresh Soni, chairman of the All India Gems & Jewellery Trade Federation. Consumption rose 13 percent to 974.8 tons last year, while official imports fell 4.1 percent to 825 tons, according to the council.