Public sector metal trading company MMTC
Limited is planning to open 11 new gold delivery depots across the country, especially in tier II and III cities, following Commerce Minister Anand Sharma's concerns on reduced gold supply, which has affected jewellery exports.
"Currently, we are delivering gold to consumers in three locations - Mumbai, Delhi and Jaipur. Now, we are working on plans to deliver gold to jewellery exporters in major cities across the country," said director Anand Trivedi.
Jewellery exporters are currently facing an acute shortage of gold due to import restrictions imposed by the Reserve Bank of India (RBI). On June 5, the RBI ordered nominated agencies and star trading houses to import gold to supply actual jewellery exporters. Earlier, banks had been asked to import gold only for supplying to exporters and hence, supply of the yellow metal to domestic jewellers was automatically kept in abeyance.
Since many nominated agencies and star trading houses could not commence gold import to service jewellery exporters, Sharma warned them their licences would be cancelled if gold for exporters was not imported. RBI has not put any restrictions on import of gold for exporters.
"Since gold supply to jewellery exporters is completely non remunerative, importers are not interested in doing a service to them. Earlier, they were supplying gold to the tune of five-10 per cent of imported quantity to exporters. The remaining meant for domestic jewellers used to fetch them a healthy margin between five-seven per cent thereby making overall import profitable," said Vipul Shah, chairman, Gems & Jewellery Export Promotion Council.
Out of 950 tonnes of gold imports, jewellery exporters require a meagre 60 tonnes. According to an estimate, MMTC imported 60 tonnes of gold last year, of which, hardly 2.5 tonnes were supplied to exporters. Jewellery exporters procure half of their gold requirement from Scotiabank.
Diamond India Ltd (DIL), a Mumbai-based company, imported gold worth Rs 2,000 crore during the last financial year. According to its chairman Praveen Shankar Pandya, a major chunk of it went to jewellery exporters.
"We have sought to set up a depot in Santacruz Electronics Export Processing Zone, Mumbai, for which the final decision is yet to come. With this, servicing exporters would be easier," he added.
Gems and jewellery exports fell 16.5 per cent to $2.70 billion in May. In June too, the decline could be in double digits, which raises concerns for India's burgeoning current account deficit.