The country's gold imports may fall this year, as the current economic condition is not conducive enough for people to take a call on their investment plans, says the World Gold Council (WGC).

In the first quarter (January-March) of 2012, gold consumption was 207 tonnes against 290 tonnes in same period a year ago, down 29 per cent.

According to Mr Ajay Mitra, Managing Director (India and Middle East), WGC, though the drop in terms of jewellery was only 19 per cent, in terms of bullion the dip was by 46 per cent.

He attributed the drop mainly to the retailers' strike during the period, sparked by the additional 0.3 per cent excise duty on jewellery imposed by the government, which was withdrawn recently.

Besides, he said the slowdown and inflation made the beginning of 2012 a challenging period for the Indian gold market. The trade segment was dis-incentivised as the government changed the customs duty structure. This resulted in importers stocking less gold. “In fact, during Akshaya Tritya , gold coins ran out of stock at many retail outlets,” he said.

Though the offtake will normalise in the coming months, he said the demand will remain latent, as the consumer may not be in a position to buy gold as he/she has to wait and watch the inflationary trend on other counts such as food, rental, fuel and other key daily needs. Additionally, jewellers are being asked to collect tax at source on all purchases above Rs 2 lakh. All this will take a toll on overall import of gold during the year. Last year, India imported about 1,000 tonnes of gold.

Talking about the trend in scrap sales, he said it has been steadily coming down, as the gold price firms up. The ‘money-for-gold' sales have come down by over 60 per cent to 50 tonnes in 2011, from 130 tonnes five years ago. “After all, gold continued to offer better returns than most other investments,” said Mr Mitra.

rravikumar@thehindu.co.in

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