Following the relaxation of import austerity from October to December 2010, when not even a single gram of gold was imported, Nepal had imported just 100 kg each in January and February 2011. But the import suddenly started to pick up from March, touching 550 kg in April and 600 kg in May. By June, the monthly import jumped to 700 kg and similar rise has been recorded for July, according to a source at the Ministry of Finance.[break]
“Surprising fact is that the import has continued to soar dramatically even as prices have consistently increased leading to drop in local demand as claimed by dealers,” said the source.
Given the situation, MoF officials suspect that rise in import could be an indication of resumption of smuggling of gold from Nepal to India. This has prompted the government to mull over fresh measures to control the imports of yellow metal.
On Sunday, Commerce Secretary Sushil Jung Bahadur Rana and Finance Secretary Krishna Hari Baskota met with Chief Secretary Madhav Prasad Ghimire and discussed on ways to deal with re-emergence of abnormal rise in the imports of gold.
The government had imposed austerity measures to control its import a year ago as well, mainly as low duty in Nepal prompted sharp rise in gold import, contributing to massive rise in trade deficit and balance of payment deficit.
Gold import had jumped to Rs 42 billion in 2009/10 even though local consumption had barely risen, and most of those had found way into the Indian market as duty in India was higher than in Nepal.
However, gold dealers ruled out outward smuggling of gold at this juncture. “Smuggling to India is out of question as daily supply of 15 kg arranged by the government is too small to meet even the local demand,” said Tej Ratna Shakya, president of Nepal Gold and Silver Dealers´ Association (Negosida).
Stating that the demand for gold in any given day stands at least 25 kg, Shakya contrary to government´s apprehension argued that at least 10 kg of gold find its way into the Nepali market from India through illegal channel to fulfill the local demand.
“Imports might have increase because people traveling outside might have brought in gold under hand carriage facility,” said Shakya.
Under the hand carriage facility, the government allows people spending more than six months abroad to bring in 1.5 kg of gold as personal property. Of that, 500 gram is allowed to enter without customs duty, but importer would need to pay customs duty on the remaining 1 kg.
“Such inflow, which used to go untraced in the past, could have come into record because the Department of Customs of late has strictly compelled the inbound travelers to declare such import at the customs,” said Shakya.
Despite rise in prices, which hit Rs 49,500 per tola (11.664 grams) on Tuesday, gold dealers said more people are buying gold because they anticipate the prices to go up further.
Negosida even estimates that such investment makes around 30 percent of the total gold consumed in the country at present.
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