India’s FY ’15 gold imports likely to surge

Author: Paul Ploumis05 Feb 2015 Last updated at 06:34:10 GMT

 

NEW DELHI (Scrap Monster): With the government easing the curbs on gold imports into the country, the gold imports are likely to climb higher during the current fiscal year. The imports during the initial ten-month period of the fiscal from April 2014 to January 2015 have jumped to 940 metric tons, according to government sources.

 

India, which accounted for one-fourth of global gold demand in 2013, initiated strict policy actions to restrict import of the yellow metal. The gold import duty was hiked sharply to 10%. In addition, the government also introduced 80:20 rule which required gold shippers to re-export one-fifth of the imported gold. Consequently, the country’s inward gold shipments had plunged 35% in 2013-’14 to 662 tonnes mainly on account of higher duty rates and import curbs.

 

Huge cut in gold import bill stabilized the country’s financial deficit position. The country’s Current Account Deficit (CAD) narrowed to $32.4 billion in FY ’14. The significant improvement in CAD forced the government to lift at least some of the restrictions on gold import. The gold inflow gained momentum since the government in May 2014 decided to allow more agencies to import gold. Moreover, the controversial 80:20 rule was also scrapped.

 

As per industry sources, the Indian gold imports during this fiscal ending March 31st, 2015 is estimated to total around 1,000 metric tons. The trend is likely to continue in the next financial year as well, unless the government imposes fresh restrictions. A decently performing stock market and gradual appreciation in gold prices may keep the gold demand under check.

 

According to Bachhraj Bamalwa, Director, All India Gems & Jewellery Trade Federation, the country saw maximum amount of gold imported during the month of November 2014. The gold imported during the month has not been fully sold in the market due to poor demand. This may bring down the import figures for the month. However, overall gold imports during the entire fiscal FY ’15 are likely to close on the higher side, he noted.