India’s gold imports, which have a bearing on the current account deficit (CAD), fell about 7 per cent to USD 20.57 billion during April-November period of the ongoing financial year, according to the commerce ministry data. Imports of the yellow metal stood at USD 22.16 billion in the same period of 2018-19. The decline in gold imports has helped in narrowing the country’s trade deficit to USD 106.84 billion during the eight-month period under review as against USD 133.74 billion in the year-ago months. Gold imports had been recording a negative growth since July this year.
However, it grew about 5 percent to USD 1.84 billion in October and 6.6 percent to USD 2.94 billion in November. India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tonne of gold annually. To mitigate the negative impact of gold imports on trade deficit and CAD, the government increased the import duty on the metal to 12.5 percent from 10 percent in this year’s Budget.
Industry experts claim that businesses in the sector are shifting their manufacturing bases to neighbouring countries due to this high duty. The Gems and Jewellery Export Promotion Council (GJEPC) has asked for a reduction in import duty to 4 percent. Gems and jewellery exports declined about 1.5 percent to USD 20.5 billion in April-November this fiscal. The country’s gold imports dipped about 3 percent in value terms to USD 32.8 billion in 2018-19. The CAD narrowed to 0.9 percent of GDP or USD 6.3 billion in July-September, 2019-20 from 2.9 percent or USD 19 billion in the same period last year, according to the RBI data.
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Source: Financial Express
