Gold imports more than doubled in August to a record high of $10.06 billion, mainly on account of a drastic cut in customs duty and ongoing festive demand, according to the Commerce Ministry data.
Photograph: Leonhard Foeger/Reuters
Gold imports stood at $4.93 billion in August 2023.
On record high imports, Commerce Secretary Sunil Barthwal said that the tariff rates on gold have been reduced drastically so that smuggling and other activities can come down.
“And this is the time when jewellers start stocking for their inventories to be sold in the festival season,” he told reporters.
In the Budget, the government slashed the duty from 15 per cent to 6 per cent.
India’s gold imports, which have a bearing on the country’s current account deficit (CAD), dipped by 4.23 per cent to $12.64 billion during April-July 2024-25.
In 2023-24, India’s gold imports surged by 30 per cent to $45.54 billion.
Switzerland is the largest source of gold imports, with about 40 per cent share, followed by the UAE (over 16 per cent) and South Africa (about 10 per cent).
The precious metal accounts for over 5 per cent of the country’s total imports.
The jump in gold imports pushed the country’s trade deficit (difference between imports and exports) to $29.65 billion in August.
India is the world’s second-biggest gold consumer after China.
The imports mainly take care of the demand by the jewellery industry.
India recorded a current account surplus of $5.7 billion or 0.6 per cent of GDP in the March quarter.
For FY24, the current account deficit narrowed to $23.2 billion or 0.7 per cent of GDP against $67 billion or 2 per cent of GDP in FY23.
A current account deficit occurs when the value of goods and services imported and other payments exceeds the value of the export of goods and services and other receipts by a country in a particular period.
India is seeking a review of certain provisions of the free trade agreement with the UAE, which came into force on May 1, 2022.
The review assumes significance as experts have raised serious concerns over the spurt in imports of precious metals from the UAE under the trade agreement.
Seeking an urgent review of the pact, think tank Global Trade Research Initiative (GTRI) has stated that the India-UAE CEPA allows unlimited imports of gold, silver, platinum, and diamonds from the UAE into India with zero tariffs in the coming years.
This will lead to significant annual revenue losses, move import business from banks to a few private traders, and replace top suppliers with Dubai-based firms, the GTRI report has said.
It highlighted that currently, gold can be imported from Dubai at 5 per cent duty, but this will drop to zero in three years if the alloy contains 2 per cent platinum.
GTRI has also claimed that many imports do not meet Rules of Origin conditions and, hence, do not qualify for concessions.
On gold imports, Commerce Secretary Sunil Barthwal said that the ministry will do a detailed analysis on this besides other precious metals and put out a “very clear picture”.
Silver imports rose to $727 million in the month under review from $159 million in August 2023.
