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RAPAPORT... In a move that will likely be celebrated across the gems and jewelry industry of India, the government today dissolved the 80:20 gold import scheme, thus freeing up incoming shipments of the precious metal for the wedding season.
This scheme, which has been in place since August 2013, was imposed for the purpose of curbing gold imports and, in turn, reducing a growing current account deficit in the country.
According to the 80:20 scheme, traders and manufacturers were required to export 20 percent of their gold imports. Even during the scheme's run, only state-owned firms and banks were permitted to import gold, although restrictions were later relaxed in May 2014, allowing six private players to operate under the 80:20 scheme, as well. It has been reported that 40 percent of the total gold imports between April and September (India's first fiscal half), were from these six players. Many industry leaders also have been critical of the 80:20 scheme, blaming it on a dramatic increase in gold smuggling.
The notification to end the scheme was shared by the Reserve Bank of India, declaring that the government withdrew this requirement placed on gold imports with immediate effect.
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