Gold buyers lined up to restart imports on Wednesday as the customs department clarified new rules, putting the world's biggest bullion buyer back in the market after a six-week gap and threatening government efforts to underpin the rupee.
About a quarter of a tonne of gold waiting at Mumbai airport should head to India's biggest gold market, Zaveri Bazaar, where sales are nearly $10 million a day, and jewellers said they would place fresh import orders as early as Thursday.
"Around 250 kg of gold, which is stuck at the airport, will get released after the order. New shipments could start within the next 2-3 days," said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.
The Reserve Bank of India (RBI), in a bid to help the government stem the tide of gold imports which had pushed the current account deficit to a record high, told importers on July 22 that a fifth of their purchases would have to be turned around for export.
But the rule's sketchy details caused buyers to hold off and instead use stocks that had piled up in April and May when record imports of 304 tonnes provoked the government into hiking duty to an all-time high of 10 percent.
On Wednesday, the Indian customs department issued its guidelines on how the central bank's call for gold imports to be split 80 percent for domestic use and 20 percent for export would be monitored.
The move aims to boost exports but could also rein in imports to around 30 tonnes a month - about half average volume - and keep India on track to meet the government's target of 845 tonnes in the 2012/13 fiscal year.
But domestic buying could surge later this year as a better than expected monsoon is expected to increase disposable incomes of farmers in rural areas, who make up about 60 percent of Indian gold demand.
"My export orders are pending since last month, I'll request my bank to place an order for 20 kg tomorrow morning," said Kumar Jain, proprietor of Umed Exports, which ships jewellery to the United States, Europe and the Middle East.
In a more than 40-clause document, the customs department laid out details on authorised importers, bonds to be given by importers over duty payments and "surprise audit or checks" by custom officers to ensure compliance.
And in a clause that may cause problems it said importers would not be able to make a third order until they had evidence of payment to exporters in the form of an inward remittance certificate, which can take nine months.
"This will make our life difficult at the time of the third import," said Pankaj Kumar Parekh, vice-chairman of the Gems and Jewellery Export Promotion Council (GJEPC).
Imports by special economic zones, which export about 20-30 tonnes a year, will not be included in the import restrictions. Domestic jewellery exports outside these areas are about 60-70 tonnes a year.