Gold imports jump 331% to record high of $14.86 billion in Nov

Gold imports stood at $3.44 billion in November 2023.

Cumulatively, imports during April-November this fiscal year rose 49% to $49 billion as against $32.93 billion in the same period last fiscal year.

According to the ministry, gold, with about 25% average annual return, is one of the best-performing assets in 2024 (till November) and high imports indicate strong investor confidence in the precious metal as a safe asset.

The other reasons include asset diversification towards gold due to global uncertainties, increasing demand from banks, cut in customs duties.

Prices of the yellow metal have increased 23% so far this year to ₹78,350 per 10 gm in the national capital.

In the Budget, the government slashed the duty from 15% to 6%.

India's gold imports, which have a bearing on the country's current account deficit (CAD), surged 30% to $45.54 billion in 2023-24.

Switzerland is the largest source of gold imports, with about 40% share, followed by the UAE (over 16%) and South Africa (about 10%).

The precious metal accounts for over 5% of the country's total imports.

The jump in gold imports pushed the country's trade deficit (difference between imports and exports) to a record $37.84 billion in November.

India is the world's second-biggest gold consumer after China. The imports mainly take care of the demand by the jewellery industry. Gems and jewellery exports last month declined 25.32% year-on-year to $17.43 billion.

The country's CAD widened marginally to $9.7 billion, or 1.1% of the GDP, in April-June 2024 against $8.9 billion, or 1%, in the year-ago period.

A current account deficit occurs when the value of goods and services imported and other payments exceed the value of 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% duty, but this will drop to zero in three years if the alloy contains 2% platinum.

GTRI has also claimed that many imports do not meet Rules of Origin conditions and, hence, do not qualify for concessions.