The Government of India has introduced new restrictions on the import of gold jewellery, and another is to raise awareness of the gold monetization scheme.
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| New rule Indian goverment |
What is the new gold rule
Yes, the Indian government has imposed restrictions on the import of gold jewellery. In a notification issued on July 12, 2023, the Directorate General of Foreign Trade (DGFT) changed the import policy for unstudded jewellery made of gold, and other articles made of gold to “restricted” from “free”. This means that a license will now be required from the government to import these goods.
The restrictions are being imposed in an effort to reduce the import of non-essential items and contain the trade deficit. The trade deficit in India has been rising in recent months, and gold imports are a major contributor to this. The government hopes that the restrictions will help to reduce the demand for gold imports and narrow the trade deficit.
The restrictions do not apply to imports of gold jewellery made in accordance with the free trade agreement between India and the United Arab Emirates. This means that gold jewellery imported from the UAE will not be subject to the restrictions.
The restrictions are expected to come into effect on July 15, 2023.
What is gold monetization scheme
Yes, Indian government has come up with a plan to monetize gold. The Gold Monetization Scheme (GMS) was launched in 2015 with the aim of mobilizing gold in households and institutions in the country and putting it to productive use. Under this scheme, individuals and companies can deposit their gold with banks or designated agencies, which are then used to print or lend gold coins or bars. Depositors will earn interest on their gold deposits and the government will also provide some incentives like tax breaks.
GMS has been relatively successful, with 21 tonnes of gold deposited under the project so far in 8 years. A report by the World Gold Council says, however, that there is still plenty of room for gold monetization in India. The country has a huge gold hoard, estimated to be worth more than $1 trillion, and GMS is one of the ways to tap into this resource.
The government is considering several measures to monetize gold, such as setting up gold exchanges, lending to gold deposits and using gold to finance infrastructure projects. These measures will help reduce India's reliance on gold imports and boost the economy.
Here are some benefits of Gold Monetization Scheme:
It helps reduce the country's dependence on gold imports.
It provides a way for individuals and companies to earn interest on their gold.
It is used to finance infrastructure projects and other productive uses.
It will help boost the economy.
There are also some challenges associated with the gold monetization scheme:
The scheme is relatively new and it is not yet clear how successful it will be.
There is not enough awareness among the public about this scheme.
The interest rates offered under the scheme are not very attractive.
Overall, the gold monetization scheme is a promising initiative to benefit the Indian economy. However, some challenges need to be overcome before the project can be fully successful.