India to assess gold policy impact as trade gap widens on surging imports
India to assess gold policy impact as trade gap widens on surging importsReuters

India will assess the impact of a recent decision that eased gold import curbs in the world's second largest bullion consumer, after surging inbound shipments pushed its trade deficit to an 18-month high.

Gold imports have risen "phenomenally" and the government will examine the impact of November's revision of the so-called 80:20 rule, Trade Secretary Rajeev Kher said in Mumbai on 16 December.

Kher told a conference: "I am sure the government would like to watch the consequences of that revision.

"So we will wait and take a call at an appropriate time."

Gold imports surged to 151.58 tonnes in November, a 38% increase over October's 109.55 tonnes, trade ministry data showed on Tuesday.

That followed 15 December's data that showed gold imports in value terms jumped in November to $5.61bn (£3.59bn, €4.51bn), helping push the trade deficit to an 18-month high.

Indian demand

India is the world's second largest bullion consumer after China.

On 28 November, New Delhi scrapped a rule tying gold imports to exports despite rising inbound shipments.

India's October gold imports surged four-fold to $4.18bn from a year ago. October shipments into the gold-crazy nation jumped to about 150 tonnes, as against 143 tonnes in September and under 25 tonnes in October 2013.

Alongside a record import duty of 10%, the government's so-called 80:20 import rule had demanded that traders export 20% of all gold imported into the country.

The rule, introduced in 2013, was aimed at lowering inbound shipments and reducing the nation's current account deficit.