New Delhi: India’s gold imports, which have a bearing on the country’s current account deficit (CAD), dipped by 4.23 per cent to USD 12.64 billion during April-July 2024-25 due to global economic uncertainties, according to government data.
The imports stood at USD 13.2 billion in April-July 2023. In July alone, the imports declined by 10.65 per cent to USD 3.13 billion as against USD 3.5 billion in the same month last year. The inbound shipments were also in negative during June (-38.66 per cent) and May (-9.76 per cent).
In April, the imports jumped to USD 3.11 billion from one billion in April 2023. According to a jeweller, the high prices are discouraging the imports but it will go up from September as the festive season will start in India and the import duty cut benefit is also there.
The government has slashed the customs duty on gold and silver to 6 per cent from 15 per cent. Gold prices rose Rs 300 to Rs 73,150 per 10 grams in the national capital on August 14 amid a jump in precious metal rates in the international markets.
In 2023-24, India’s gold imports surged by 30 per cent to USD 45.54 billion. Switzerland is the largest source of gold imports, with about 40 per cent share, followed by the UAE (over 16 per cent) and South Africa (about 10 per cent).
The precious metal accounts for over 5 per cent of the country’s total imports. Despite the dip in gold imports, the country’s trade deficit (difference between imports and exports) widened to USD 23.5 billion in July and USD 85.58 billion during the first four months of this fiscal.
India is the world’s second-biggest gold consumer after China. The imports mainly take care of the demand by the jewellery industry. The gems and jewellery exports during April-July this fiscal contracted by 7.45 per cent to USD 9.1 billion. India recorded a current account surplus of USD 5.7 billion or 0.6 per cent of GDP in the March quarter.
For FY24, the current account deficit narrowed to USD 23.2 billion or 0.7 per cent of GDP against USD 67 billion or 2 per cent of GDP in FY23.
A current account deficit occurs when the value of goods and services imported and other payments exceeds the value of the export of goods and services and other receipts by a country in a particular period.
As per the government data, silver imports jumped to USD 648.44 million during April-July 2024 as against USD 214.92 million in the year-ago 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 per cent duty, but this will drop to zero in three years if the alloy contains 2 per cent platinum. GTRI has also claimed that many imports do not meet Rules of Origin conditions and, hence, do not qualify for concessions.