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Gold and silver imports declined 40 per cent to $33.46 billion in 2013-14 mainly due to restrictions imposed by the Government on inbound shipments of the precious metal to narrow the current account deficit.
Import of gold and silver in 2012-13 stood at $55.79 billion.
Imports were down 17.27 per cent to $2.75 billion from $3.33 billion in the same month previous year
Lower imports helped to narrow the trade deficit to $138.59 billion in the previous fiscal.
Current account deficit
India’s current account deficit (CAD), which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 per cent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold.
A high CAD puts pressure on the rupee, which in turn makes imports expensive and fuels inflation.
Recently, Finance Minister P Chidambaram had projected CAD at about $35 billion in 2013-14, or about 2 per cent of GDP, down from $88.2 billion, or 4.8 per cent of GDP, in 2012-13.
Customs duty on gold
The Government had increased the Customs duty on gold to 10 per cent and banned the import of gold coins and medallions, while the RBI linked imports to exports.
India is the largest importer of gold, which is mainly utilised to meet the demand of the jewellery industry. Imports stood at about 830 tonnes in 2012-13.
The Commerce and Industry Ministry is pitching for easing of the gold import restrictions to boost gems and jewellery exports, which declined by 8.82 per cent to $39.52 billion in 2013-14.
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