India’s gold imports have declined by about 30% to $31.8 billion during April-February 2023, compared to the same period in the previous year, according to data from the country’s commerce ministry. The decline in gold imports is attributed to several factors, including high customs duty and global economic uncertainties.
India’s gold imports and country’s trade deficit:
The decline in India’s gold imports by about 30% to $31.8 billion during April-February 2023 has not helped in narrowing the country’s trade deficit, which was estimated at $247.52 billion for the same period, compared to $172.53 billion in the year-ago period. The negative trade balance is a cause for concern for the Indian economy, which is heavily dependent on imports of goods and services.
Reason behind decline in gold imports:
Industry experts attribute the decline in gold imports to high import duty and global economic uncertainties. The Indian government has increased customs duty on gold imports to reduce the country’s dependence on imported gold and address concerns over the current account deficit. However, this has made gold imports more expensive, leading to a decline in demand for the yellow metal.
India’s Silver Imports:
Silver imports, on the other hand, have risen by 66% to $5.3 billion during April-February 2023. The rise in silver imports is attributed to the increasing demand for the metal in industrial applications, including electronics, solar panels, and batteries.
India: the largest importer of gold:
India is the largest importer of gold, primarily catering to the demand of the jewellery industry. The country imports 800-900 tonnes of gold annually in volume terms. The decline in gold imports has also affected the gems and jewellery industry, which saw a 0.3% decline in exports to USD 35.2 billion during the 11 months of the last fiscal.
The government had increased the gold import duty to 15% from 10.75% last year to check the current account deficit (CAD). While this move may have helped reduce the CAD, it has also impacted the demand for gold and the jewellery industry’s exports. Experts have called for a review of the high import duty to boost exports and help the domestic industry. The government may need to strike a balance between reducing the CAD and promoting exports and growth in the economy.