India’s gold and silver imports slumped 69 percent in December after the government curbed purchases to contain the current-account deficit that weakened the rupee to a record low last year.
Inbound shipments of the precious metals were valued at $1.77 billion last month, compared with $5.68 billion a year earlier, Commerce Secretary S.R. Rao told reporters in New Delhi today. Imports declined 30 percent to $27.4 billion in the nine months through December, he said.
Imports tumbled after the government increased the tax on purchases three times in 2013 to 10 percent, linked shipments to re-exports and tightened financing rules to curtail a record current-account deficit that pushed the rupee to an all-time low against the U.S. dollar. Curbs should be retained at least until March to stabilize the trade gap, Economic Affairs Secretary Arvind Mayaram said Jan. 7.
India is seeking to cut purchases to 800 metric tons this financial year from 845 tons a year earlier. Imports totaled 423 tons in the six months through September, according to the World Gold Council.
Bullion, which posted the first annual drop since 2000 last year, was at $1,235.91 an ounce at 2:08 p.m. in Mumbai today. Gold tumbled 28 percent in 2013, erasing more than $73.4 billion from the value of gold-backed funds as some investors lost faith in the metal as a store of value.
Any decision on relaxing restrictions on imports will have to be taken by the Finance Ministry, Rao said today. “I am sure the finance minister will consider all the relevant facts,” he said.