Government bans gold import temporarily

The Ministry of Commerce and Supplies has banned the import of gold until further notice.
Stating that the import of gold has hurt the foreign exchange (forex) reserve and pulled the Balance of Payment (BoP) to negative, the ministry has said it has banned the import of precious yellow metal under Import-Export Act 2013.
However, the traders have been saying that the present quota of 10 kg per day is less for the domestic market that has demand of around 35 kg daily, according to the Nepal Gold and Silver Dealers’ Association (Negosida).
The ministry decision coupled with the dispute among the gold traders is going to hit the consumers on the eve of Teej -- Hindu women's festival, when the gold demand soars. The consumers are bearing the brunt of traders row as they have been paying more price for the precious yellow metal than the international price. The domestic price has been fixed on the basis of international market price but since last one week domestic consumers are paying from Rs 1,125 to Rs 500 more than the international price due to failure of consensus among the three waring gold traders' associations.
Meanwhile, the central bank governor said that the ban is temporary and the central bank is bringing new policy on gold import. In the fiscal year 2009-10, above Rs 40 billion gold has been imported. "In the first 11 months of 2009-10, there has been Rs 39.4 billion worth gold import," said Nepal Rastra Bank (NRB) report.
Due to excessive import the BoP has plunged to around Rs 24 billion deficit in the first six months of the fiscal 2009-10. The central bank has then tightened the gold import suspecting the gold that has been imported paying foreign currency has been smuggled to India due to customs difference between the two country.
The government then has brought a Financial Bill to increase the gold imports duty by Rs 130 to Rs 470. In India the customs is Rs 480. After the Financial Bill the country has seen drop in the gold import as there is only Rs 10 difference in Indian and Nepali customs.
The government has on Thursday tabled another Financial Bill for the gold imports duty increase as the earlier Bill is going to expire on September 5. In case the Bill is not passed, there would again be a wide difference in the customs duty on gold in Nepal and India encouraging the gold smuggling to India.
However, the recent supply crunch has seen the reverse trend as the precious yellow metal has is beinf smuggled to Nepal from India to meet the demand.