India’s gold imports during February this year are likely to end higher at nearly 35 to 40 tonnes, when matched with 26 tonnes imported during the same month last year. According to estimates provided by the gold and silver refiner MMTC Pamp, the country has already imported 23.2 tonnes of gold during the first fortnight of the month.
 
The gold imports by the country has shown steady growth ever since the Reserve Bank of India (RBI) scrapped the controversial 80:20 rule which required importers to export one-fifth of the imported gold volumes. In a notification issued yesterday, the RBI has lifted the ban on imports of gold coins and medallions by banks and trading houses. Also, banks are now allowed to lend gold on loan to jewelers. Furthermore, the industry is hopeful of a sizable cut on gold import duties from the existing 10%, to be announced during the Budget.
 
The central bank clarified that it actually had rolled back the situation to pre-80:20 rule. However, importing agencies had been complaining of procedural holdups at Customs while trying to import gold. The notification released yesterday merely states that the import rules will return to pre-July ’13 situation, wherein nominated banks can import gold by producing delivery details. The banks need not produce end-usage details. Besides, the nominated banks are allowed to import gold on consignment basis. The banks could use this gold to provide metal loan to jewelers. The RBI’s new gold lending norms have made hedging easier for jewelers.
 
According to jewelers, the gradual removal of restrictions on gold has created a positive sentiment and the business is soon expected to return to normal. The projected strong economic growth cycle is likely to boost consumer demand. The gold imports in the country are likely to increase further in March with the advent of wedding season demand.

Source:metal.com