India is likely to see less than 500 tonnes of gold import in the ongoing financial year (FY14) if the government does not relax the import restrictions, according to an industry body.
"The domestic jewellery sector is bleeding, with lack of stocks. If the government does not relax the import norms, including the 80:20 rule, the sector is going to witness a major setback," All India Gems & Jewellery Trade Federation (GJF) chairman Haresh Soni told PTI here.
With the current situation, jewellery manufacturing is expected to see a decline of about 40 per cent this financial year, compared to last year, rendering many artisans jobless, he said.
Total sales are likely to decline by 25-30 per cent this fiscal year compared to last year as the market did not have enough variety to woo the customers, he said.
The Centre tightened norms to curb gold imports which had contributed hugely to the bloating of the current account deficit, which is the difference between outgo and inflow of the forex.
Mr Soni said that without policy relaxation the gold import this year may be even less than 500 tonnes. In 2012-13, gold imports stood at 845 tonnes.
The jewellers, he said, are ready to help the government in keeping the gold import at $30 billion in value terms.
"However, this $30 billion worth gold imported into the country should be done smoothly, which will help the sector," he said, adding that the restrictions are not only giving rise to smuggling but also to monopoly.
The 80:20 rule mandates importers to channel at least 20 per cent of the imported gold to jewellery exports. Jewellers are also asked to give proof of the export realisation of the first consignment before seeking delivery of the third tranche from importers.
Besides, the government also increased import duty on gold to 10 per cent and banned inward shipments of gold coins and medallions.
Mr Soni said these restrictions are also leading to soaring premiums, as high as $120-130 per 10 grams from the earlier $1.5-2.
"The gold price gap between the international and domestic market resulted in diverting the NRI business flow to the Middle East countries," Mr Soni said.
In FY13, about 15-20 per cent of business flow was from non-resident Indians (NRIs), he said.
He also said the GJF is trying to talk to the government to for immediate measures in order to save the sector, and if it doesn't do anything the industry will resort to a nation-wide agitation.