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India gold import curbs review in March on deficit control

January 28, 2014

India can review gold import curbs by the end of March if Asia's third-largest economy controls the current-account deficit, said Finance Minister Palaniappan Chidambaram . "We can revisit curbs on gold imports by end of the year but let me hasten to add that it will happen only after we get a firm grip on the current-account deficit," Chidambaram said in New Delhi on Monday. Shipments rose in December from a month earlier, Revenue Secretary Sumit Bose said at the same event, and confirmed that the minister was referring to the financial year ending March 31 . The rupee has rebounded about nine per cent from a record low against the dollar in August after the government raised the tax on imports three times in 2013 and linked purchases to re-exports. The government is seeking to trim imports to 800 metric tonnes in the financial year ending March from 845 tonnes a year earlier and the restrictions helped cut the deficit in the quarter ended September to the lowest level since 2010. The deficit, the broadest measure of trade, tracking goods, services and investment income, will narrow to below $50 billion this fiscal year from a record $88 billion in 2012-2013, according to Economic Affairs Secretary Arvind Mayaram . The shortfall was $5.2 billion in July through September, compared with $21.8 billion for the prior quarter, the Reserve Bank of India said on December 3 . Gold for immediate delivery in London traded at $1,270 an ounce at 4:06pm in Mumbai , while futures on the Multi Commodity Exchange of India Ltd rose one per cent to Rs29,822 per 10 grammes. The rupee traded 0.9 per cent lower at 63.2250 per dollar, after touching 63.3050 earlier, the lowest since November 14 , according to data from local banks. The clampdown on imports has spurred smuggling, and between one tonne and three tonnes of gold is being illegally brought in every month, Chidambaram said. Pakistan imposed a 30-day ban on gold imports last week to check a surge in smuggling that's spurred by a steep increase in import duty in a "neighbouring country," according to an official statement. The All India Gems & Jewellery Trade Federation expects the government to ease restrictions that require them to set aside 20 per cent for re-exports as jewellery by the end of March, Bachhraj Bamalwa, a director, said on January 21 .

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Source: Khaleej Times (United Arab Emirates)

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