Imports of Gold by NRIs

Import of Gold by NRI Reserve Bank granted general permission to persons of Indian nationality or origin to bring into India, as part of their baggage, up to 10,000gms, after staying abroad for a period of not less than 6 months. 1. A baggage declaration form has to be filled for the unaccompanied baggage. 2. When the passenger has declared the gold, but could not clear it for want of sufficient foreign exchange for paying Customs duty, then reexport of the same may be permitted

Conditions 1. The required eligibility is that the person should be of Indian origin and holding a valid passport. 2. The limit of importing gold (including ornaments) in India is upto 10 kg per passenger as a part of their baggage after paying the required customs duty 3. Passenger is coming to India after a stay abroad of about six months. Short visits of duration not exceeding 30 days will be ignored, if this facility has not been availed by the passenger during such visits. 4. The gold may be brought into India in any form, including ornaments (other than ornaments studded with stones and pearls). 5. Rate of duty is payable in convertible foreign currency at the rate of Rs. 250 per 10 gms of gold. 6. Import should be made at the time of arrival of the passenger or within 15 days of the arrival of the passenger into India. A declaration need to be filed by the importer for obtaining the permitted quantity of gold from customs bonded warehouse of State Bank of India or from Metal & Mineral Trading Corporation subject to other conditions. Baggage Rule for import of Gold Custom Bonded Warehouse - This is a option to take delivery of the metals in India from the customs bonded warehouses to be operated by the State Bank of India and the Minerals and Metals Trading Corporation (MMTC) 1. Sometimes physical carriage of gold involved security hazards, particularly for passengers arriving by flights landing at odd hours during nights, it was thought fit to introduce Customs Bonded Warehouses. 2. This facility would be operated by SBI and MMTC in Delhi, Mumbai and Thiruvananthapuram and specified delivery centers. 3. Passengers availing of this facility would have the option to make the payment for the gold in foreign exchange either abroad or in India. 4. In cases where passengers had made the payment abroad and were found ineligible for import on their arrival in India, appropriate provision for refund would be provided under the scheme. 5. Passengers intending to avail of the facility of delivery of gold through such warehouses would be required to make a declaration to this effect before the customs authorities at the time of their arrival in the country at the respective airports Sahar, IGI Delhi and Thiruvananthapuram. 6. The eligibility of the passengers would be decided by the customs authorities at the time of customs clearance of the passengers and such passengers would deposit the duty at the airport itself. Gold Jewellery

1. A passenger who has been residing abroad for over one year and is returning to India may be allowed to import, free of duty, jewellery in his use up to an aggregate value of ten thousand rupees in the case of a male passenger and twenty thousand rupees in case of a female passenger. The jewellery, which is in addition to the jewellery otherwise allowed without payment of duty (under the Baggage Rules), only is liable to payment of duty under the above mentioned scheme for import of gold. Concessional duty on Import of Gold as Baggage 1. The required duty shall be paid in convertible foreign currency; 2. The eligible passenger (eligible conditions as given above) should file a declaration in the prescribed form before the proper officer of customs at the time of his arrival in India declaring his warehouse and pays the duty leviable thereon before his clearance from customs. Clearance of Gold on Payment of Duty 1. 1. The passenger is required to file a declaration on the prescribed form before the Customs Officer at the time of arrival in India stating his intention to obtain the gold from the customs bonded warehouse and pay the duty before clearance. Gold Coins 1. There is no restriction on import of foreign coins (whether current or non-current) made of gold or any other metal. Eligible passengers may be allowed to import gold in any form, including coins whether current/non-current/commemorative) but excluding jewellery studded with stones or pearls.

GOVERNMENT POLICIES
1) Govt policies unlikely to curb gold imports
2) Government raises import duty on gold to 8% 3)

Restrictions
1) The central bank had extended the restrictions on gold imports to other agencies apart from banks. 2) It had also stopped banks and non-banking financial companies from providing loans against
gold coins.

3) Economists said raising import duty to curb gold imports may not be effective and may give rise
to smuggling. "It might help in the short-term but it may not be an effective strategy in the long term," said DK Joshi, chief economist at rating agency Crisil.

4) He said financial savings instruments have to be diversified and made attractive to wean away
investors from depending on gold.

5) Experts also said that the government must take measures to boost exports and make them more
competitive to help trim the current account deficit.

Gold import policy under govt. review

The Centre is reviewing the gold import policy and is considering a ban on the sale of gold coins by banks. These measures are being considered as the demand for gold is showing no signs of dampening, especially after a crash in prices since April. High import of gold, along with oil, are the key drivers of the current account deficit (CAD), which hit a record 6.7% in the October-December quarter. Finance minister P Chidambaram said on Monday that the government is reviewing the gold import policy as the country, the world's top consumer of gold, cannot afford an increase in imports of the yellow metal. Gold is considered an idle asset and the government and the RBI have been trying to channel household savings into more productive instruments. The issue was discussed during a meeting of the sub-committee of Financial Stability and Development Council (FSDC), headed by RBI governor D Subbarao. Echoing Chidambaram's views, Economic Affairs Secretary Arvind Mayaram told reporters that the government is considering more measures to reduce gold imports. He added, "(The government) may consider banning gold coin sale by banks." The meeting, also attended by the capital markets regulator Sebi and pension regulator Pfrda, was convened to discuss issues relating to the development of the financial sector and inter-regulatory coordination. The meeting also took up some other important matters, including chit fund regulations. After identifying the burgeoning CAD as the greatest risk to the economy, the RBI in May decided to restrict the import of gold on consignment basis by banks, only to meet the genuine needs of exporters of gold jewellery. The banking regulator also imposed curbs on banks and NBFCs for extending loans against gold coins and units of gold ETFs. The government, on its part, had increased the import duty on gold to 6% in January from 4%.

Custom Bonded Warehouse

This is an option to take delivery of the metals in India from the customs bonded warehouses to be operated by the State Bank of India and the Minerals and Metals Trading Corporation (MMTC) 1. Sometimes physical carriage of gold involved security hazards, particularly for passengers arriving by flights landing at odd hours during nights, it was thought fit to introduce Customs Bonded Warehouses. 2. This facility would be operated by SBI and MMTC in Delhi, Mumbai and Thiruvananthapuram and specified delivery centers. 3. Passengers availing of this facility would have the option to make the payment for the gold in foreign exchange either abroad or in India. 4. In cases where passengers had made the payment abroad and were found ineligible for import on their arrival in India, appropriate provision for refund would be provided under the scheme. 5. Passengers intending to avail of the facility of delivery of gold through such warehouses would be required to make a declaration to this effect before the customs authorities at the time of their arrival in the country at the respective airports Sahar, IGI Delhi and Thiruvananthapuram. 6. The eligibility of the passengers would be decided by the customs authorities at the time of customs clearance of the passengers and such passengers would deposit the duty at the airport itself.

Threats:However, the biggest threat to the government's exchequer is the smuggling of gold that could increase due to the arbitrage between the customs paid price and price without the import duty which would be large enough to entice smugglers to trade in gold bars and coins illegally in the country.

India may review gold import policy:

India cannot afford high levels of gold imports and may review its import policy, Finance Minister P Chidambaram said on Monday, after imports of precious metals jumped more than 150% in April.

India, the world's biggest buyer of gold, hiked its import duty to 6% in January in an attempt to limit purchases and rein in a record high current account deficit. Gold is the second biggest import item after crude oil.

Gold prices on the Multi Commodity Exchange rose to a session high of 27,015 rupees per 10 grams after Chidambaram's remarks, before easing back to trade 0.63% higher at 26,980 rupees.

On May 13, the RBI introduced more restrictions on purchases for jewellers and banks as it also weighs in to curb imports.