India’s gold imports at 11-month high in October at over 99 tons

Ministry of Commerce and Industry, on Monday revealed the details of gold imports in India over the past year and October’s imports which amounted to 99.62 tons valued at $3.5 billion.

The last time that gold imports were high was in December 2015, which was at 121.84 tons, for a price of $3.81 billion.

The country’s trade deficit has decreased since last year as well as the value of imported gold which was $1.68 billion for 48.73 tons of gold in October 2015.

“If the recent amendments to the Income Tax Act dispel demand for holding of gold as well as jewellery, the gold import volumes may decline significantly in the coming months. Assuming that the volume of gold imports during December2016-March 2017 reverts to the average of around 45 tonnes per month seen in April-November 2016, India’s current account deficit would be curtailed at around US$15 billion in FY2017,” Aditi Nayar, Principal Economist, ICRA Limited, said.

She further added, "However, if the volume of gold imports in the last four months of FY2017 is elevated at an average of ~70 tonnes per month, driven by continued wedding demand, India’s current account deficit could be as high as nearly US$20 billion in FY2017.”

A report by Thompson Reuters said that as on November 14, the gross official import of gold was nearly $1.5 billion.

Of this, as much as $900 million worth of the metal was imported after the demonetisation of high-value legal tenders, a report by Business Standard said.  

The gold import bill in October-November 2016 is estimated to be nearly as high as the previous six months, which would be a key factor driving a rise in India’s current account deficit in H2 FY2017 relative to H1 FY2017, the report by ICRA said.