Gold imports may drop to 650 tonnes this fiscal

The country’s duty-paid gold imports for the fiscal 2017-18 may touch 650 tonnes at anaverage price of $1,280-1,300 per ounce.

This, according to industry experts, would still be manageable on the current account deficit front, thanks to lower global prices of the yellow metal as compared to what was in 2013-14.

Speaking on gold import trends in India, Rajesh Khosla, Chairman Emeritus, MMTC-PAMP, informed that gold imports for the financial year 2017-18 may touch 650 tonnes — almost at the same level as last year.

Experts stated that the shift in preference for investment from gold to other asset classes joined by higher import duty may cloud the imports, which was earlier estimated to touch 700 tonnes.

“The younger generation doesn’t look at gold as haven. The emerging asset classes such as cryptocurrencies are turning out to be the preferred investment for people below the age of 35,” said Joshy Jacob at the India Gold Policy Centre.

“In the first nine months of the fiscal April-December 2017, gold imports hovered at about 500 tonnes. We expect this to touch 650 tonnes by the end of the fiscal — almost at the same level as that of last year. But the imports will still be manageable as the average international gold price has come down as compared to previous years,” Khosla said.

According to Khosla, in the past, average international gold prices had touched $2,000/oz, while this fiscal the average gold prices would hover around $1,280-1,300. “It will be manageable as the spending on the imports will reduce and the revenues from the imports will go up. Therefore, even if the volume has not come down significantly, the absolute value of imports will come down. Therefore, there will be less burden on our pockets,” added Khosla, who was in Ahmedabad for a conference on Gold and Gold Markets organised by the Indian Institute of Management-Ahmedabad on Friday.

Khosla, however, expressed his apprehensions over the possibility for reduction in import duty on gold, as widely demanded by jewellers and bullion traders. “Until we make stable revenues from GST, there doesn’t seem any possibility of reducing import duty. There is no point in cutting government revenues from one source, before the other source of income gets stable,” he added.

Notably, the import duty on gold is 10 per cent, in addition to the Goods and Services Tax of 3 per cent. This higher import duty, as claimed by jewellers, is prompting smugglers to resort to illegal imports.