Gold shortage spikes up, Indian bullion trade demands cutback of import duty to 6% to foster supply

NEW DELHI (Scrap Monster) : The intense shortage of gold in domestic market has lifted the premiums to record high. The jewellers are being forced to pay premiums as high as $150 per ounce over the spot London prices. In the wake of dried-up imports and highly expensive commissions, the representatives of the All India Bullion and Jewellers Association (AIBJA) led by M C Jain, President, AIBJA submitted its proposals to the government.

The official gold imports by the country have declined sharply since July this year. According to estimates, the gold imports by the country during October till date is only around 5 tonnes, against an actual demand of around 100 tonnes. According to AIBJA, only few importing agencies are granted licenses to import gold into the country, as per RBI guidelines. The 20% re-export norm has further halted the gold imports by these agencies, leading to supply crunch.

Taking advantage of the festive season demand, importers are charging excessively high premiums from jewellers. The severe shortage of gold has lifted the gold premiums to record high. With gold demand expected to peak during the first week of November, gold premiums may even reach $200 per ounce, which translates to Rs 4 lakhs per kilogram.

The Association demanded the gold import duty to be lowered from existing 10% to 6%. A positive policy outcome from the government alone could provide a solution to the current crisis situation prevailing in the industry. A cut in customs duty on gold imports may bring some relief by ensuring increased availability of gold in domestic market.