Restrictions on gold imports to be reviewed by March end, says P Chidambaram

The restrictions on gold imports will be reviewed by March end, Finance Minister P Chidambaram said on Monday. "I am confident that by the end of this year we will be able to revisit some of the restrictions on gold import but we will do so only when we are absolutely sure that we have a firm grip on the current account deficit," he said while addressing tax officials at the Customs Day in New Delhi.

To contain the rising gold imports, the government had increased customs duty on the yellow metal three times in 2013. The levy currently stands at 10 per cent. Besides, the Reserve Bank has also linked imports of the metal to exports amid a widening CAD and depreciation of the rupee.

Gold imports, which touched a high of 162 tonnes in May, fell to 19.3 tonnes in November in the wake of a series of curbs by both the government and the RBI. The imports in December was a "little higher" than in November, Finance Secretary Sumit Bose told reporters. Chidambaram said there has been about 1-3 tonnes of gold smuggled into the country every month following the restrictions imposed on shipment last year.

"I know gold smuggling has increased...But the restrictions on gold import were absolutely necessary because it is these restrictions which have brought down gold import which in April and May had crossed 300 tonnes. "If we had not imposed restrictions, there was no way we could have managed balance of payments or the current account deficit," he said.

With the clamour for a duty cut on gold imports growing, Congress President Sonia Gandhi had last week written to Commerce Ministry in this regard. Gold imports constitute the second biggest component in the import bill after crude oil. Spurt in gold import had pushed CAD to a record high of USD 88.2 billion or 4.8 per cent of GDP last fiscal.