Here Are The First Big Changes For India’s Gold Imports

India’s gold import market is becoming a weekly subject. With developments coming fast out of the world’s top gold consuming-nation.

We got another key decision this week. With regulators making one of the biggest moves in months in terms of loosening rules for bringing bullion into the country. 

On Wednesday, the Reserve Bank of India said it is lifting a ban on the import of gold coins by banks. Financial institutions will now be free to bring in as much gold as desired, in the form of coins and medallions. 

Such shipments had been frozen since last year. And the opening of this import channel could thus provide a major lift to gold-buying in the country. 

Especially for the jewellery sector. Which has traditionally used banks in order to obtain gold for processing — an option that has been completely closed of late. 

The Reserve Bank said that commercial banks will be allowed to resume their usual practice of importing gold on “consignment” for customers in the jewellery sector. Under this system, banks can lend their imported gold to jewellers — helping to increase the overall metal supply in the country. 

Some restrictions still remain on banks in terms of gold supply. Imported gold coins will have to be used immediately — either through sales to customers, or through loans. Any un-utilized gold supply will be subject to re-export. 

We’re thus not back to complete freedom in this key market. But things are getting a lot closer to normal. The next step would be a reduction in gold import tariffs from the current 10% — a move that was officially recommended by India’s trade ministry last week.

Watch for more regulatory announcements from India’s finance ministry as this saga continues to unfold. 

Here’s to banking on gold,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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