Jewellery stocks rise on hope of ease of gold import restrictions

With the United Progressive Alliance (UPA) Chairperson Sonia Gandhi approaching the the Indian government to ease the imports restrictions on gold and hear the needs of the gem and jewellery sector, shares of prominent gem and jewellery companies took an upswing on Thursday, reports say. The industry has been under the sway of a 10 percent import duty imposed on gold and the RBI 80:20 restriction in which 20 percent of the gold imported is required to be exported.

The Indian gem and jewellery sector has been seeking a relief from this, as the restrictions have drastically shrunk jewellery exports. Also, the restrictions have increased the threat of gold smuggling.

Sonia Gandhi approached the government asking it to look into the matter and take appropriate action to deal with it, reports say.

The restrictions were imposed by the government to control the country’s current account deficit (CAD). The India gem and jewellery trade bodies have been making representations to the government to ease the rules, especially now that the CAD, has come under control. Sonia Gandhi’s approach could create some pressure to ease the rules, reports say. Although the Indian Finance Minister Mr. P. Chidambaram has ruled out any relaxation of norms stating that it would be only possible to do so after the government gets a ‘firm grip on the CAD.’