April 14, 2017
Gold imports in January-March 2017 were the most since the same quarter of 2013
Gold imports have gathered more steam in the past six months, suggesting the yellow metal has acquired more glitter since the government’s move to demonetise high-value currency notes.
In the five months since the demonetisation announcement in November last year, the country has imported 360 tonnes of gold, against 510 tonnes in full 2016.
India’s gold import bill for the March quarter of 2017 was the highest since the same quarter of 2013. The government had started raising the import duty and restrictions only after witnessing a rise in imports in early March. The increase in the import bill this March quarter is also because of unofficial imports falling to a very low level amid demonetisation and high gold prices internationally.
Initially, a large part of gold demand was due to the government’s note ban decision, as when several black money holders put their money, in old currency, into gold – even if they had to pay a high premium. Imports moderated thereafter, when there was a tight liquidity situation. However, from January, there was a gradual pick-up, with marriage-related demand and general consensus on prices not increasing much. The demand increased further in March, and the trend so far in April has continued, with Akshaya Tritiya-related demand. Akshaya Tritiya, a day considered auspicious for buying gold, falls on April 28 this year.
For imports, there has been a rising trend also because of an imminent revision in tariff value, on the basis of which customs duty will be charged till the next revision irrespective of import price.
Amid rising prices, importers prefer to release their imported gold a few days before the announcement of the tariff value.
Sudheesh Nambiath, head for precious metals, India and South Asia, GFMS Thomson Reuters, says: “In a rising price trend, with gold import tariffs set twice a month and dollar-rupee rates set on different dates, there is bound to be speculative interest, in addition to genuine demand. Imports have jumped towards the end of a month, just a day or two before reset of tariffs.”
A banker dealing in gold imports, confirming a sharp increase ahead of increase in tariff value, said: “Presence of Free Trade Warehousing Zone in Chennai has made it easier to clear gold in a day, without having to wait for three days.”
Another Mumbai based banker confirmed that higher import trend has continues in April so far. Jewellers were ordering gold for ornaments to be prepared for Akshaya Tritiya.
[The Business Standard]