Due to global economic uncertainties and high prices, India’s gold imports declined in April-July 2024. The decline impacts the country’s current account deficit. Read more.
Imports amounted to 13.2 billion US dollars in the period April to July 2023.
In July alone, imports fell by 10.65 percent to USD 3.13 billion compared to USD 3.5 billion in the same month last year. Incoming deliveries were also negative in June (-38.66 percent) and May (-9.76 percent).
In April, imports rose to USD 3.11 billion from USD 1 billion in April 2023.
According to a jeweller, the high prices are a deterrent to imports. However, prices will rise from September onwards as the festive season begins in India and there is also a reduction in import duties.
The government has reduced tariffs on gold and silver from 15 percent to six percent.
Amid a surge in the price of precious metals in international markets, gold prices in the capital rose by Rs 300 to Rs 73,150 per 10 grams on August 14.
In 2023-24, India’s gold imports increased by 30 percent to USD 45.54 billion.
With a share of around 40 percent, Switzerland is the largest gold importer, followed by the United Arab Emirates (over 16 percent) and South Africa (around 10 percent).
The precious metal accounts for over 5 percent of the country’s total imports.
Despite the decline in gold imports, the country’s trade deficit (difference between imports and exports) rose to $23.5 billion in July and to $85.58 billion in the first four months of this fiscal year.
India is the second largest consumer of gold in the world after China. Imports mainly cover the needs of the jewelry industry.
Gem and jewelry exports fell by 7.45 percent to USD 9.1 billion during the April-July period of this fiscal year.
India recorded a current account surplus of USD 5.7 billion, or 0.6 percent of GDP, in the March quarter. In FY24, the current account deficit narrowed to USD 23.2 billion, or 0.7 percent of GDP, from USD 67 billion, or 2 percent of GDP, in FY23.
A current account deficit occurs when the value of imported goods and services and other payments exceeds the value of exported goods and services and other income of a country over a given period.
According to government data, silver imports rose to USD 648.44 million during April-July 2024 from USD 214.92 million in the same period last year.
India is seeking a review of certain provisions of the free trade agreement with the United Arab Emirates, which came into force on May 1, 2022.
The review is important because experts have raised serious concerns about the sharp increase in precious metal imports from the United Arab Emirates under the trade agreement.
Calling for an urgent review of the agreement, think tank Global Trade Research Initiative (GTRI) said the India-UAE CEPA allows unlimited duty-free imports of gold, silver, platinum and diamonds from the United Arab Emirates to India in the coming years.
This will lead to significant annual revenue losses, shift import business from banks to a few private traders and replace key suppliers with Dubai-based companies, the GTRI report says.
It pointed out that gold can currently be imported from Dubai with a 5 percent tariff, but this will drop to zero in three years if the alloy contains 2 percent platinum.
GTRI has also claimed that many imports do not meet the conditions of the rules of origin and are therefore not eligible for concessions.
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