CA Surendra Mehta, National Secretary of IBJA, shared his perspective on gold imports, the Gold Monetisation Scheme (GMS), lending framework reforms, and possible government measures to control the Current Account Deficit (CAD). His insights highlighted the practical challenges surrounding gold mobilisation, RBI reserves, taxation reforms, and policy implementation within the Indian jewellery industry.
Quick Summary
- CA Surendra Mehta shared his views on gold imports and government policy measures.
- He explained why RBI gold reserves cannot be directly used for jewellers.
- He highlighted the practical challenges in restricting B2C sale of gold coins and bars.
- He stated that GMS reforms are long-term solutions and may not address immediate CAD concerns.
- He suggested allowing lending and borrowing of gold through amendments in the Income Tax Act.
- He also recommended removing capital gains tax on gold sales to encourage gold mobilisation.
CA Surendra Mehta, National Secretary, IBJA Shares His Views on Gold Import, GMS & Policy Measures
Industry Perspective on Gold Imports, Gold Monetisation Scheme, Lending Framework & Government Measures to Control CAD
Q. Can RBI use its gold reserve and give the same to jewellers to stop gold import ?
Views on RBI Gold Reserve Usage
Ans: RBI can take sovereign guarantee against the gold only from president of India and not from jewellers or any one else. It would be like RBI taking bank guarantee of some bank thru jewellers which is under in its own regulation. Hence this idea can not be implemented.
Q. Can Govt stop sale of coin and bars in B2C ?
Perspective on Restricting Coin & Bar Sales
Ans: Some regulated exchanges and Funds also sale coin and bars and these regulated entities are used for hedging mechanism too. Also note that Law must be implementable also. Imagine if a jewellers in a remote area selling coin and bars, how will govt even know about it. Also remember jewellers also sale 24k jewellery. Also imagine govt says stop selling 22k jewellery and sale only 9kt jewellery. What happens then? We are in free democracy and there cannot and will not be any control on your business. Hence ideas and laws which are not practical can not be implemented. Today govt is not interested in value addition, it is interested in controlling CAD by not affecting anyone’s business.
Q. Why not bring GMS in new format ?
Opinion on Revamping Gold Monetisation Scheme
Ans: Govt has already burned their fingers on old GMS and today nobody can guarantee its success including any association. Also even if it become successful , it may take at least 1-2 years to mobilise even 100-200 tons of gold . This are good ideas but works in longer terms and can not control immediate falling rupee and CAD.
Q. So what we should ask immediately to govt.
Immediate Recommendations to Government
Ans: Allow lending and borrowing of gold by amending income tax act . Currently income tax act does not permit lending and borrowing of commodities .
Also govt should remove capital gain tax on sale of gold so that more and more people start selling their gold. Govt can make centralised agency to purchase gold in open market so that only bills are not used to take benefit of capital gain tax.
Q. What Govt Can do at this juncture?
Suggestions on Controlling Gold Imports
Ans: Govt can curtail or cut all sorts of funding which directly or indirectly bring more Gold import in the country so that Gold available within the industry is mobilised.
FAQ
Who is CA Surendra Mehta?
CA Surendra Mehta is the National Secretary of IBJA.
What was CA Surendra Mehta’s key concern regarding gold imports?
He highlighted the need for practical policy measures to control CAD and reduce dependence on fresh gold imports.
Why can RBI not directly provide its gold reserves to jewellers?
According to CA Surendra Mehta, RBI can only take sovereign guarantees from the President of India and not from jewellers or private entities.
What are his views on restricting the sale of gold coins and bars?
He stated that such restrictions may not be practical or implementable in a free-market democracy.
What reforms did he suggest to the government?
He suggested amendments in the Income Tax Act to allow lending and borrowing of gold and recommended removing capital gains tax on gold sales.
What was his opinion on the Gold Monetisation Scheme (GMS)?
He said that while GMS is a good long-term idea, it may not immediately help in controlling CAD or stabilising the rupee.
Source: SVAR Media Network
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