RBI eases gold import to promote its export under its 20:80 formula

Star trading houses — big importers and exporters has been permitted by the RBI to import gold under its existing 20:80 scheme. Thus far, the facility was available to select banks only and other big entities like star trading houses were forbidden from importing the yellow metal.
As per the extant rules, importers can buy gold, on a condition that 20% of it is exported as finished products. In July 2013, the RBI had imposed severe restrictions on gold imports in order to curb surging Current Account Deficit (CAD) and the declining rupee. The central bank had tied imports with exports and prescribed a 20:80 formula.
As per the 20:80 scheme, an importer has to ensure that at least 20% of every lot of imported gold is exclusively made available for exports as finished good and the balance for domestic use.
The RBI has also permitted banks to provide gold metal loans to domestic jewellery manufacturers, out of the eligible domestic import quota of 80%.



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