Mubasher: India’s gold imports witnessed a surprise hike in the last three-month period ended September on speculation that domestic jewellery manufacturers and traders are hoarding the yellow metal lest a further hike in gold import duty.
India, the world’s second biggest gold consumer after China, currently applies a 10% duty on gold imports.
The 15% drop in the value of the Indian currency has driven domestic gold prices to 28% higher than its international prices, according to Arabian Business.
“Industry watchers are now waiting to see whether there would be any significant increase in jewellery exports from India in the coming months, as there would be a lag period because of manufacturing time,” it added.
It is worth noting that the UAE is the key destination for Indian gold jewellery, making up as much as 80% of the Asian nation”s gold jewellery exports.
India’s gold imports surged by 23% to 75 tonnes in July and more than doubled to around 100 tonnes in August.
While the quick estimate for September gold import figures by India’s commerce ministry indicated a 51.47% growth in value terms.
Traders and industry bodies also cited other reasons for the spurt in gold imports.
“There could be a possibility that traders and jewellery makers are stocking up a bit for the approaching Diwali and marriage season in India which see a huge pick up in domestic demand, due to which gold imports in the July-Sept 2018 quarter might have gone up,” P R Somasundaram, India Managing director of World Gold Council, told Arabian Business.
In the same vein, industry insiders say there have been signs of a rising trend of gold jewellery being bought and brought to India by Indians working in the Middle East, in addition to “Indian tourists bringing gold to the UAE to take advantage of the significant differences in prices there,” Arabian Business said.
“The quantity of gold jewellery being brought by Indians from Dubai and elsewhere in the UAE would be insignificant because of the existing customs restrictions,” said India Bullion and Jewellers Association (IBJA) Secretary Surendra Mehta.