India Considers Ban on Gold Imports to Undermine Black Market
Is India thinking about banning gold imports?
That could be as the trade body Indian Bullion & Jewellers Association (IBJA) informed its 2500 members through text that the government is considering a ban on gold imports into the country per part of a larger crackdown on black money.
The efforts were first made public when the Prime Minister in India, without notice, banned the nation’s 500 and 1000 rupee bank notes and replaced them with a new one in an effort to undermine saving under the mattress.
“We hear from certain circles of this possibility (gold import ban and advancement of deposit date) though nothing official is out yet,” says Surendra Mehta, national secretary, IBJA. “The association is supportive of the government’s fight against black money and has informed its members of the possibility of such action. We have asked our members to support the government wholeheartedly.”
The text was no secret. “Already, 600 jewellers have received notices from the tax department to disclose their sales till November 8. We are aware that certain members of the trade are importing gold only to sell the same against old notes at a hefty premium. So, if the government wants to stop this malpractice it might consider a ban on imports. Alternately, if it directs all jewellers to deposit or declare old notes by November 15, it would not necessarily consider banning imports.”
India imports approximately 700 tons of gold yearly. This enormous quantity would mean a major fall in the demand for gold if India banned imports.
Analysts who take the potential gold ban seriously anticipate a drop in prices for the yellow metal. According to sources, India Bullion & Jewellers Association has informed members certain circles are hearing arguments for a ban on gold imports as reported in the media to the public.