Gold imports by India, the world’s second-biggest user, jumped in the first 10 months of this financial year as the government eased curbs on overseas purchases.
Shipments jumped to about 940 metric tons from April through January, said two government officials with direct knowledge of the matter, asking not to be identified as the provisional data isn’t public. Finance Ministry spokesman D.S. Malik didn’t answer two calls to his mobile phone. Purchases fell 35 percent to 662 tons in 2013-2014, according to the Commerce Ministry.
Imports increased after the government in May allowed more agencies to bring in gold and scrapped a rule requiring shippers to re-export 20 percent of their shipments. India curbed imports in 2013 after the current-account deficit reached a record, pushing rupee to an all-time low. The South Asian nation accounted for 25 percent of global demand in 2013, according to the World Gold Council.
“Imports may be around 1,000 tons this fiscal and remain stable next year unless we see any fresh government regulations coming in,” Madhavi Mehta, an analyst at Kotak Commodity Services, said by phone from Mumbai. “The equity markets are doing well and prices are still a bit on the higher side, so we don’t expect any kind of surge in demand next year.”
India increased import taxes on gold three times in 2013 to 10 percent and introduced the 80:20 rule. It eased the controls after the deficit narrowed to about $32.4 billion in the fiscal year ended March 31, 2014, from a record $87.8 billion a year earlier.
“We imported the highest amount of gold this fiscal in November and that gold has not yet been sold in the market because of slow demand,” Bachhraj Bamalwa, a director at the All India Gems & Jewellery Trade Federation, said by phone from Kolkata. India probably imported about 840 tons in calendar 2014 and shipments this year may be the same, he said.
Gold for immediate delivery in London rose 0.6 percent to $1,268.22 an ounce at 4:20 p.m. in Mumbai. Futures on the Multi Commodity Exchange of India climbed 0.7 percent to 27,485 rupees ($445) per 10 grams.
Taxes from gold imports totaled 206 billion rupees in the 10 months through January, compared with 102 billion rupees in 2013-2014, the officials said. There is no proposal to cut the tax, they said.
Bullion in India is bought for weddings as part of the bridal trousseau and gifts. Demand also climbs during the festival season that runs from late August to October.