Gold imports fall 4.23% to USD 12.64 billion in April-July on global uncertainties | commodities

According to a jeweller, high prices are discouraging imports, but they will increase from September as the festive season will begin in India and the benefit of reduced import duties is also there.

The government has reduced customs duties on gold and silver to 6% from 15%.

Gold prices rose by Rs 300 to Rs 73,150 per 10 grams in the national capital on August 14 amid a rise in precious metal rates in international markets.

In 2023-24, India’s gold imports increased by 30% to reach $45.54 billion.

Switzerland is the largest source of gold imports, with a share of around 40%, followed by the United Arab Emirates (over 16%) and South Africa (around 10%).

The precious metal represents over 5% of the country’s total imports.

Despite falling gold imports, the country’s trade deficit (the difference between imports and exports) widened to $23.5 billion in July and $85.58 billion in the first four months of this fiscal.

India is the second largest consumer of gold in the world after China. Imports mainly cater to the demand of the jewelery industry.

Exports of gems and jewelry during the April-July period of this tax contracted by 7.45% to $9.1 billion.

India posted a current account surplus of $5.7 billion or 0.6 percent of GDP in the March quarter. For FY24, the current account deficit narrowed to $23.2 billion or 0.7% of GDP from $67 billion or 2% of GDP in FY23.

A current account deficit occurs when the value of imported goods and services and other payments exceeds the value of a country’s exports of goods and services and other receipts in a given period.

According to government data, silver imports rose to $648.44 million in April-July 2024 from $214.92 million in the year-ago period.

India is seeking revision of certain provisions of the free trade agreement with the United Arab Emirates, which entered into force on May 1, 2022.

The analysis assumes significance as experts have expressed serious concerns about the increase in precious metal imports from the UAE under the trade deal.

Seeking an urgent review of the pact, think tank Global Trade Research Initiative (GTRI) said the India-UAE CEPA allows unlimited imports of gold, silver, platinum and diamonds from the UAE into India at zero tariffs for the next few years .

This will lead to significant annual revenue losses, shift import business from banks to a few private traders and replace top suppliers with Dubai-based firms, the GTRI report said.

He pointed out that currently, gold can be imported from Dubai with a 5% duty, but this will drop to zero in three years if the alloy contains 2% platinum.

GTRI also argued that many imports do not meet the conditions of the rules of origin and therefore do not qualify for concessions.

First publication: August 15, 2024 | 14:29 IST