India's gold imports for financial year 2014 will be less than 500 tonnes, according to All India Gems & Jewellery Trade Federation (GJF), unless the national government relaxes the rules on import restrictions of the safe haven yellow metal.
"The domestic jewellery sector is bleeding, with lack of stocks. If the government does not relax the import norms, including the 80:20 rule, the sector is going to witness a major setback," Haresh Soni, GJF chairman, told PTI.
India, considered the world's largest gold-consuming nation, had been instituting a number of measures to reduce its gold imports in a bid to control its widening account deficit.
In 2013 alone, the government increased three times the levies imposed on imported gold bullion.
Many jobs will be at risk with the low projected amount of gold imports for FY2014. Jewellery manufacturing will face the brunt with a forecast drop of 40 per cent this financial year from a year ago, Mr Soni said.
Total sales of jewellery have been forecast to slide between 25 per cent to 30 per cent this fiscal year compared because the market cannot provide enough new items to woo the customers, he said.
Mr Soni said that while the jewelers are ready to help the government in keeping the gold import at US$30 billion in value terms, it should be done smoothly to help the sector, noting the restrictions have opened the doors to illegal smuggling as well as monopoly.
In financial year 2012-13, India's imports of the safe haven yellow metal gold reached 845 tonnes.
As of end March 2013 alone, India's imports of the safe haven yellow metal gold has reached a total worth of $54 billion.