India Set to Relax Barriers on Gold, Silver Imports

India's small jewelers are to get a boost with the remaining barriers on gold and silver imports set to be lifted, a move that will reduce their costs, with a formal announcement expected soon.

The government has reportedly decided to throw open bullion imports for individuals and small jewelers. Currently, gold and silver can only be imported through various organizations, such as select public sector banks, creating bureaucratic bottlenecks and higher costs. Indians returning from abroad are allowed to bring a limited quantity of gold with them by paying a nominal amount of duty.

The liberalization of import controls is part of the government's plan to turn India into a global manufacturing hub for gems and jewelry. Earlier this year, measures were announced to liberalize foreign direct investment rules in the mining sector, including gold and diamond mining. India produces a miniscule amount of its gold and silver requirements.

India is the world’s largest and fastest growing jewelry market and the industry is expected to maintain an annual growth rate of 10-15 percent in the coming years. Growing at over 40 percent per annum, India is also the fastest growing jewelry exporter in the world.

India's diamond and jewelry exports in the 2004-05 financial year zoomed past the country's official target of $13.3 billion as they soared close to 30 percent to $15.677 billion.

While exports of cut and polished diamonds soared 29.6 percent to $11.181 billion from $8.627 billion in 2003-04, the jewelry sector saw even higher growth with an exceptional rise in exports of 42.2 percent. India is aiming for annual gem and jewelry exports of $20 billion by 2007.