August sees a surge in gold imports following import duty cuts
MUMBAI (Economy India): India’s gold imports surged to a record ₹84,263 crore ($10.06 billion) in August, marking the highest-ever monthly import figure. This sharp rise is attributed to a significant reduction in gold import duties, alongside the anticipation of increased demand during the upcoming festive season. This comes after a 4.23% decline in gold imports during the April-July period, indicating a trend reversal as August kicked off the seasonal demand.
Duty Cuts Drive Gold Imports
In July, the government reduced import duties on gold from 9% to 6% during the Union Budget announcement. This led to a sharp increase in imports. Last year, in August, gold imports were worth $4.93 billion (₹41,294 crore). The change in duty encouraged jewelers to stock up, expecting higher demand during the festive season.
Gold Price Surge in 2024
Bullion experts noted that the demand for gold increased significantly as jewelers began preparing for the festivals. “The reduction in import duties gave jewelers the confidence to stock up ahead of the festive season,” said a leading bullion trader. In 2024, the price of 24-carat gold has already surged by ₹10,030, reflecting a 15.86% increase. As of Tuesday, the average price for 10 grams of 24-carat gold stood at ₹73,276, compared to ₹63,246 at the end of December 2023.
Impact on Trade Deficit
The increase in gold imports has also contributed to the rise in India’s trade deficit, which reached ₹2.48 lakh crore in August. India remains the second-largest consumer of gold globally, after China. The surge in imports, coupled with rising prices, has created a noticeable impact on the economy.
Anticipation of Festive Demand
Experts are optimistic that the increase in imports will be met by strong demand during the festive season, which typically sees a surge in gold purchases for weddings and religious celebrations. The higher demand is expected to continue through the end of the year, contributing to the overall economic activity.
(Economy India)
