policy | Gold imports rise 22% to USD 33.65 billion in 2017-18
The country’s gold imports, which has a bearing on the current account deficit (CAD), increased by 22.31 per cent to USD 33.65 billion in 2017-18, according to Commerce Ministry data. Imports of the yellow metal stood at USD 27.51 billion in 2016-17 financial year. In 2015-16, the imports aggregated at USD 31.7 billion.
CAD, which is the difference between the inflow and outflow of foreign exchange, jumped to USD 48.7 billion, or 1.9 per cent of GDP, in 2017-18 fiscal.
This was higher than USD 14.4 billion, or 0.6 per cent, CAD in 2016-17 fiscal.
Increase in gold imports pushed the country’s trade deficit to USD 157 billion in the last fiscal, an increase of about 45 per cent as compared to the year ago period.
Imports of the metal, however, recorded negative growth since January this year.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 700-800 tonnes of gold annually.
To mitigate the negative impact of gold imports on trade deficit and CAD, the government took certain measures to cut the inbound shipments of the yellow metal.
Those measures include imposition of restriction on duty free gold imports from the South Korea as allowed under the existing India-Korea free-trade agreement, and imposition of self-use condition on Premiere Trading House/Star Trading House authorised to import the precious metal (gold) directly from overseas bullion supplier.
These steps yielded desired results as the imports dipped by 31.25 per cent to USD 6.05 billion during April-May 2018.
On the other hand, to push exports of gems and jewellery, the industry has time and again asked the government to reduce gold import duty to 5 per cent from the current 10 per cent.
According to industry experts, due to high duty, businessmen of the sector are shifting to neighbouring countries and impacting the country’s exports.
The gems and jewellery exports in 2017-18 declined to USD 41.5 billion as against USD 43.4 billion in the previous fiscal.