The government may relax the curbs on gold imports by the end of current financial year if manages to control the country's ballooning current account deficit (CAD), Union Finance Minister P. Chidambaram said.

India is the world's second largest consumer of gold, after China. Heavy imports of the precious yellow metal led to ballooning of the country's CAD to a record high last year, forcing the government to take strict measures to curb imports of the metal.

The curbs helped the government in dragging gold imports down but they also hit the country's jewellery industry hard. Earlier this month, UPA Chairperson Sonia Gandhi forwarded the All India Gems & Jewellery Association's request for a tariff cut to the commerce ministry.

Speaking about the possible relaxation in gold import curbs, Mr. Chidambaram said, "I am confident that by the end of this year we will be able to revisit some of the restrictions on gold imports but we will do so only when we are absolutely sure that we have a firm grip on the current account deficit."

India's CAD jumped to a record high of $88.2 billion, or 4.8 per cent of the country's gross domestic product, in FY2012-13, with heavy gold imports playing a key role in the surge. Gold is the second big item in the country's import bill after crude oil.

The government responded by taking several bold steps to curb soaring gold imports, including hike in gold import duty from 4 per cent to 10 per cent.