The removal of gold import restrictions is on the cards and the end result for gold investors is an increase in demand for the yellow metal, the Finance Ministry claimed but local jewelers were of the view that it will lead to price manipulation and mal practices.

Sri Lanka will award 50 licenses to import gold tax free, Finance Minister Ravi Karunayake said adding that the tax free import licenses will be given though the Central Bank. The gold will be used by goldsmiths to produce jewellery.

Local jewellery manufacturers who currently used to purchase gold from commercial banks will have to go after selected individual importers to buy their requirement, a leading member Sri Lanka Gem and Jewellery Association (SLGJA) said adding that they cannot expect fair play from such gold traders.

The Commercial Bank and Bank of Ceylon are the highest gold importers among banks at present but under the 2016 budget proposal, banks have been told to stick to their core business and are unlikely to be given god import licences.

Import of gold on consignment account basis could be done only by a licensed commercial bank or any other limited liability company approved by the Controller of Exchange for that purpose at present.

Jewellery manufacturers used to directly purchase this precious metal from commercial banks and they prefer the present system rather than buying it from importers selected by the government, SLGJA member said adding that they might smuggle it to lucrative markets such as India, one of the world’s largest purchasers of gold creating a substantial profit for the Sri Lankans playing in the field.