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U-turn on economic policy spurs gold smuggling in India

U-turn on economic policy spurs gold smuggling in India

MUMBAI: India’s gold jewellery market might resume “normality” after facing the difficulties due to government’s highly controversial economic policy. The government withdrew controversial policy, yesterday which in turn, dramatically increased gold smuggling.

In a statement issued on Friday 28 November, the Reserve Bank of India announced, “It has been decided by the Government of India to withdraw the 20:80 scheme and restrictions placed on [the] import of gold…with immediate effect.”

The 20:80 scheme referred to a restriction imposed by the Indian Government in August 2013 that mandated 20 percent of all gold imports would be reserved exclusively for export purposes, while the other 80 percent would be made available for domestic use.

It was said the scheme was introduced in order to reduce India’s current account deficit (CAD), as the country had been importing more goods than it had been exporting. However, while the CAD reportedly did improve, it was widely reported that the reduction in imports of the metal had resulted in an increase in gold smuggling.

Colin Shah, jewellery panel committee convenor of India’s Gem & Jewellery Export Promotion Council (GJEPC), commented, “The withdrawal of this scheme is good for the industry and good for the country. The smuggling will stop and it will introduce transparency.”

Members from the Indian jewellery industry have welcomed the government’s decision to lift a restriction on the country’s gold imports.