I had the chance this week to reconnect with Vishal Vyas, head of operations at one of India’s top bullion dealers, Pushpak Bullions Pvt. Ltd.
It was a powerful conversation, as Vishal indicated that the Indian Government and Central Bank are now stepping back in their fight against gold, allowing select bullion & jewelry merchants to import the metal on a highly controlled basis. This loosening of policy according to Vishal, isn’t eliminating market bottlenecks, but to a certain extent, is reducing domestic premiums.
Commenting on the Indian government’s newly adjusted import policy, Vishal noted that, “In the last month the central bank and the finance ministry has permitted imports of gold into India. They have considered a new scheme which is called 80/20, that is applicable for all gold which is imported in India, where 80% of the stock imported can be used for domestic purposes, [but] 20% has to be re-exported, that would be the obligation.”
An interesting element of the new import scheme according to Vishal, is that, “There are a lot of procedures to go through. It is not very easy to procure gold under this scheme. Everything is being [inspected] about the business—past performance, whether it has an export portfolio, whether they have [pre-established] clients who can buy the jewelry. So after considering [these rules], there are only three nationalized banks and one private bank who are now active, or are allowed to import gold.” ...