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India may change rules on gold imports for star trading houses: source

Tuesday, December 9, 2014 - 21:39
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India will announce changes as early as this week to a rule mandating so-called star trading houses export 100 per cent of their gold imports, a policy maker with direct knowledge of the upcoming action said on Tuesday.

[MUMBAI] India will announce changes as early as this week to a rule mandating so-called star trading houses export 100 per cent of their gold imports, a policy maker with direct knowledge of the upcoming action said on Tuesday.

India could also announce changes to rules last year mandating that all imports be paid fully with cash margins.

The actions would come in the form of a clarification to the country's surprise move last month to scrap a rule mandating traders export 20 per cent of all gold imports, in what had been called the 80:20 import rule.

The changes to 80:20 had left unclear the fate of "star trading houses," or leading private trading firms, which had been mandated last year to export 100 per cent of their gold imports.

The policy maker added in the clarification India would give these star trading houses "a free hand" without specifying any further.

"What remains is star trading houses, which are allowed to import (gold) only for 100 per cent export. That remains, but that is not what we wanted. We want everyone to have a free hand," the policy maker said.

He declined to be identified because the measure has not been announced yet.

Traders had said they had expected potential clarifications to the 80:20 rule, citing widespread speculation in markets.

India this year has eased some of the restrictions on gold imports it imposed in 2013 when a wide current account trade deficit had sparked the worst currency turmoil since the 1991 balance of payment crisis.

REUTERS