India scraps controversial gold import quota

India Has an End artificial to the controversial 80:20 import rule, which stipulates that at least 20% of imported gold must be re-exported abroad. This step comes as a surprise, because until recently new measures were taken into account to curb the import of gold.

The government has scrapped the import quota in the hope that more gold will enter the country legally from now on. The import restrictions created a scarcity of gold on the Indian market, a scarcity that was filled with smuggled gold. Smuggling began to increase because the structural problem of the import quota was not addressed.

Unexpected

The Indian government received an urgent request from the Reserve Bank of India on Friday evening to abolish the 80:20 import quota. No further explanation was given for this decision. A few days earlier, the Indian central bank and the Ministry of Finance had been in contact about the import levy on precious metals.

Because the import of gold and silver in India has increased so much in recent months, it was assumed that there was talk of introducing new measures to reduce imports. limit, but the opposite turned out to be the case.

The removal of this import duty is a relief for jewellers who have been struggling to keep gold in stock lately. The demand for gold is always relatively high in India towards the end of the year, as the wedding season coincides with various festivals. Especially for these occasions, gold is often given as a gift by family and friends.

Smuggling

Smugglers became more and more creative in hiding gold. The most extreme cases range from people who need surgery because they had swallowed gold to a dead cow where Gold bars were hidden in it. The smuggling of gold took off in the summer of last year, because with the introduction of the import quota, not enough gold was allowed to be imported. The hope is that smuggling will decrease and tax revenues will increase. After all, the import levy on gold will remain in force.