"We have to maintain an export level of 20 percent which is fair and will be very good for the government as well," he says in an interview to CNBC-TV18.
Below is the verbatim transcript of Mehul Choksi's interview on CNBC-TV18
Q: What is your reaction on RBI's notification on gold imports?
A: The intent is good. They have to see the modalities because in the last two months there have been many circulars, banks and all the institutions are confused about what is exactly being put in. This is a clear mandate and will help the jewellery business a lot.
They mean that import restriction is off against only to import on cash. So, the letter of credit and the bank loan will now be available as what it was before. We have to maintain a 20 percent export which is fair and will be very good for the government as well.
Q: Does this alleviate the pain that you have actually been facing as far as working capital and cash flow is concerned?
A: The entire jewellery industry could be relieved but most of the banks are reacting very slow at the moment for the last many circulars, they have not been operative. So, we have to see that many players come in the field. That will take little time because there have been guidelines by the government to be sure about the gold import.
Q: If the 20 percent has gone to some other company which has delayed in exporting your consignment of 100 kilograms of which you will get 20 kilos is going to be delayed, do you really think it will be that much easier?
A: I don't think there will be any problem because the other 20 percent, they have to fulfill the export but there will be many suppliers. So, we could buy from other supplier who has fulfilled that particular condition. But they have to import against cash basis that they have removed which is good and will help the current account deficit (CAD) and also help the rupee because we were getting this credit at a very cheap price from the overseas market and this would help ease the CAD problem.
Q: For the remaining 80 percent no imports will be allowed on a consignment basis and for that you have to pay upfront cash, is that true?
A: All the restrictions they are lifting are clearly mentioned. If you import on cash, a lot of dollar is going to go out.
Q: The only notification that continues to be operational is the one that has been issued by the RBI today. Does everything else issued earlier stands withdrawn today?
A: Yes. All the restrictions are left except that we have to fulfill the 20 percent export criteria and it makes more sense to import on a deferred payment. This is because when government is looking for bond issue or any other issue, this is equivalent because every month there is a USD 4-5 billion of cash outflow going out of the country. So, if it is deferred it will help the CAD as well as the rupee situation.
So, you will be allowed to import on any terms as far you fulfill the criteria of exporting 20 percent out of that. Only the banks will have to move fast and all the notified agencies have to move fast because there have been so many circulars that people wait to see the reaction.
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