Expect a plunge of 35% in gold imports this year

Gold imports rise despite of curbs

Gold imports have started rising again and rose to 38 tonnes in January, from a low of 3 tonnes in August, which prompted RBI and the government to continue with the restrictions on its inward shipments.

Gold imports rose in December to 25 tonnes, higher than 19 tonnes in the previous month, mainly on account of wrong interpretation of the RBI’s 80:20 scheme, sources said. As per the data, gold imports had touched a low of 3.38 tonnes in August, after the RBI came out with the restrictive 80:20 norm, under which gold imports were allowed only after exporting 20 per cent of the inward shipment.

Gold imports were dipping earlier

Indian’s choking gold supplies from foreign exporters has led to a massive drop of gold imports. The decline in gold import in India is further expected to downside this fiscal, according to the representatives of major gems and jewellery trade bodies of India.

Seeking relief from the Govt. to ease the current 10 % hike in gold import duty, the chairman of All India Gems and Jewellery Trade Federation (GJF), Mr. Haresh Soni said that gold import this fiscal would plunge by 35 % if the Govt. does not take steps of relaxation.

The stringent restrictive measures carried out by India to curb the gold import and thereby axing the ballooning Current Account Deficit (CAD) of the country was a windfall to the jewelry sector of India. The gold import restriction that prevails in the country according to GJF could further pull down the percentage of gold intake by 35 % to a year before to 550 tones. While addressing the media, Soni expressed his concerns on the declined gold import in India which has lead to the deficiency of stocks, rendering the artisans jobless. The lack of stocks in the coming festival and wedding seasons in India would make it hard to fulfill the demands of the customers, especially in a country like India which is one of the largest gold consumers of the world.

The World Gold Council on its latest estimate had reported that India’s position of being the world’s largest gold consumer has been dethroned by China owing to the tightening of gold import rules in India. This itself indicates the drastic drop of India’s gold import.

Estimates show that India’s bullion import suffered big fall by 40 % in April to January period to settle at $ 27 billion this fiscal. Indian gold import this fiscal accounts to be at 515.65 tones, wherein a majority of 300 tonnes was purchased by foreign jewelers in the form of fine jewelry to satisfy the demand of the Indian customers. Meantime, the decline of the import of raw materials has also seen to pull down the gold exports of the country over the year in the form of jewellery, medallions and coins.

Gold imports rise again, touch 38 tonnes in January

Gold imports rose in December to 25 tonnes, higher than 19 tonnes in the previous month, mainly on account of wrong interpretation of the RBI’s 80:20 scheme, sources said.

Gold imports have started increasing again and rose to 38 tonnes in January, from a low of 3 tonnes in August, which prompted RBI and the government to continue with the restrictions on its inward shipments.

The unexpected increase in gold imports in the two consecutive months – December and January – forced RBI to issue a clarification earlier this month saying that the nominated banks and agencies will not be allowed to import in excess of their entitlements in first
or second lot under the 80:20 scheme.

“Import of gold in the third lot onwards will be lesser of the two — five times the export for which proof has been submitted or quantity of gold permitted to a nominated agency in the first or second lot,” the RBI notification said.

In view of the representation being received by the RBI and the finance ministry, the central bank has said that the quantum of the third lot of import would be five times the export from the previous lot subject to the condition that it would not exceed previous entitlements. The government is hopeful of bringing down the CAD to $45 billion in this fiscal ending March, from $88.2 billion in 2012-13.