Gold imports up 15.4% to $13.16 bn in April-July period; experts say traders may shift manufacturing bases to other countries

New Delhi: The country’s gold imports which have a bearing on the current account deficit (CAD), increased by 15.4 percent to $13.16 billion (about Rs 92,000 crore) during April-July period of the current fiscal, according to commerce ministry data.

Imports of the yellow metal stood at $11.41 billion (about Rs 80,000 crore) in the same period of 2018-19. CAD, which is the difference between the inflow and outflow of foreign exchange, increased to $57.2 billion or 2.1 percent of the Gross Domestic Product (GDP) in 2018-19 as against 1.8 percent in the previous year. It stood at $48.7 billion in 2017-18.

Since January this year, gold imports have recorded a double-digit growth except in February when it dipped by about 11 percent.

India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tonnes of gold annually.

To mitigate the negative impact of gold imports on trade deficit and CAD, the government increased the import duty on gold to 12.5 percent from 10 percent in this year’s Budget.

According to industry experts, there are apprehensions that sectoral players may shift their manufacturing bases to neighbouring countries due to high import duty on gold in India.

The Gems and Jewellery Export Promotion Council (GJEPC) had expressed disappointment over the hike in import duty. Gems and jewellery exports declined 5.32 percent to $30.96 billion in 2018-19.

The country’s gold imports dipped about 3 percent in value terms to $32.8 billion during 2018-19.