Indian gold buyers rush to order now import rules are clear
Wed Sep 4, 2013 6:57pm IST
By Siddesh Mayenkar
MUMBAI, Sept 4 (Reuters) - India's gold buyers lined up to
restart imports on Wednesday as the customs department clarified
new rules, putting the world's biggest bullion buyer back in the
market after a six-week gap and threatening government efforts
to underpin the rupee.
About a quarter of a tonne of gold waiting at Mumbai airport
should head to India's biggest gold market, Zaveri Bazaar, where
sales are nearly $10 million a day, and jewellers said they
would place fresh import orders as early as Thursday.
"Around 250 kg of gold, which is stuck at the airport, will
get released after the order. New shipments could start within
the next 2-3 days," said Bachhraj Bamalwa, director at the All
India Gems and Jewellery Trade Federation.
India's central bank, in a bid to help the government stem
the tide of gold imports which had pushed the current account
deficit to a record high, told importers on July 22 that a fifth
of their purchases would have to be turned around for export.
But the rule's sketchy details caused buyers to hold off and
instead use stocks that had piled up in April and May when
record imports of 304 tonnes provoked the government into hiking
duty to an all-time high of 10 percent.
On Wednesday, the Indian customs department issued its
guidelines on how the central bank's call for gold imports to be
split 80 percent for domestic use and 20 percent for export
would be monitored.
ORDERING TOMORROW
The move aims to boost exports but could also rein in
imports to around 30 tonnes a month - about half average volume
- and keep India on track to meet the government's target of 845
tonnes in the 2012/13 fiscal year.
But domestic buying could surge later this year as a better
than expected monsoon is expected to increase disposable incomes
of farmers in rural areas, who make up about 60 percent of
Indian gold demand.
"My export orders are pending since last month, I'll request
my bank to place an order for 20 kg tomorrow morning," said
Kumar Jain, proprietor of Umed Exports, which ships jewellery to
the United States, Europe and the Middle East.
In a more than 40-clause document, the customs department
laid out details on authorised importers, bonds to be given by
importers over duty payments and "surprise audit or checks" by
custom officers to ensure compliance.
And in a clause that may cause problems it said importers
would not be able to make a third order until they had evidence
of payment to exporters in the form of an inward remittance
certificate, which can take nine months.
"This will make our life difficult at the time of the third
import," said Pankaj Kumar Parekh, vice-chairman of the Gems and
Jewellery Export Promotion Council (GJEPC).
Imports by special economic zones, which export about 20-30
tonnes a year, will not be included in the import restrictions.
Domestic jewellery exports outside these areas are about 60-70
tonnes a year.
