Investment friendly gold policy on cards

DELHI: The Centre will soon come out with a new Gold Policy. The policy which is expected to be announced towards the end of next month, is likely to be comprehensive, much more liberalised and user-friendly. The new gold policy will be announced separately and that it will not be part of the forthcoming Foreign Trade Policy.

This was indicated today by commerce secretary, SN Menon while interacting with the Gold committee members of Assocham here. The Chamber wants the forthcoming Gold Policy to facilitate banks to hedge in future markets in gold and to encourage mutual funds to invest in gold.

Other issues raised in the meeting include measures to improve the ability of banks to implement gold-linked saving scheme and also suggest appropriate customs and foreign trade measures that are required to be undertaken to facilitate manufacturing and trading in gold.

Assocham’s alternate president, Anil K Agarwal suggested that the policy should include policy pronouncements for developing India as a global hub for bullion trade and establishment of gold as a reliable investment product and use of retail bullion reserves in the country.

The Chamber also sought broad basing of existing list of canalised bullion importers in the proposed Gold Policy. It demanded removal of canalisation of bullion import as it will reduce transaction cost and make procedures simple.

A liberalised policy for import of gold and silver was first announced way back in ’97 wherein canalised bullion import was permitted through certain nominated agencies and banks. This decision empowered canalised agencies to freely import bullion without any quantitative restrictions on them.

The Chamber is of the view that the monopoly of select agencies for bullion imports should come to an end as the policy decision of ’97 has lost its utility as it restricts the entry of serious players in the bullion market. It has also advocated the need for removal of restrictions for overseas business in gold and silver mining.

Allowing entry of foreign companies in gold and silver mining will facilitate huge international investments in gold mining in India, the Chamber says.

It has demanded establishment of Free Trade Zones (FTZs) to develop bullion markets in India. The suggested FTZs should be set up with involvement from the RBI, commercial banks, refiners, fabricators, importers and exporters of bullion and should be kept outside the taxation net of octroi, sales tax and import duty.