Rice mills encash gold rush

Discussion in 'Economy & Infrastructure' started by parijataka, Mar 25, 2012.

  1. parijataka

    parijataka Senior Member Senior Member

    Oct 15, 2011
    Likes Received:
    Few days ago there was a news report that exports of gold jewellery and diamonds (diamonds are imported, cut and exported from Surat, Gujarat) had suffered due to government restrictions on import of gold and diamonds to prevent `round tripping` i.e. import and re-ecport of the same item again. I was wondering why the central govt wold want to harm an industry that is providing employment to so many skilled craftsmen and is a major export earner. Looks like the shenanigans (this sounds so familiar in this country) of a few crooked people are hurting the genuine jewellery and gem industry.

    Two things seem to be happening here -

    1> Some business people are taking advantage of special incentives such as high rates on deposits for exporters in banks.

    2> Something called `muraba trading` forbidden by RBI. Pasting a comment from TOI that explains this -

    raghvan (mumbai)
    3 hrs ago (08:08 AM)

    The explanation given is not full. The author has not mentioned that after a specified period the deposit matures and the original gold import is paid . The original gold import value is higher than the export value and is effectively the interest on the deposit. This is called muraba trading which is not permitted by RBI . It is resorted to give a return to muslims who are not permitted to take interest.

    Last edited: Mar 25, 2012

Share This Page