Commerce Ministry calls meeting with jewellers on gold import issues

New Delhi: The Commerce Ministry has called a meeting of gems and jewellery exporters Wednesday to discuss issues regarding gold imports for the sector.

According to sources, Commerce Secretary Rajeev Kher would discuss ways to ensure smooth supply of gold for exporters without putting pressure on the Current Account Deficit (CAD) situation.

The meeting also assumes significance in the backdrop of removal of the '80:20' scheme. Under that, 20 percent of the imported gold had to be mandatorily exported before bringing in new lot.

Gold imports surged by over six-fold to USD 5.61 billion (over Rs 35,000 crore) in November.

Higher gold imports have pushed up trade deficit to one-and-a-half year high of USD 16.86 billion in November as against USD 9.57 billion in the same month last year.

In the presentation to Prime Minister Narendra Modi, the Commerce Secretary has suggested cutting import duty on gold to 2 percent from the current 10 percent level.

Last week, the Reserve Bank had said that the CAD widened to USD 10.1 billion, or 2.1 percent, of GDP in July-September. It cited higher trade deficit due to rising gold imports as the primary reason for the spike in CAD.

The CAD, which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 percent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold.

However, it narrowed sharply to 1.7 percent of GDP in the April-June quarter of this fiscal due to decline in gold imports.

Gems and jewellery export grew by 44.2 percent year-on-year to USD 3.69 billion in November.