Alarmed by the looming curbs on Gold imports India jewellers have called for slashing the sales of gold coins and bars. Major retailers like TBZ, Gitanjali and Tanishq have voluntarily stopped the sale of gold bars and coins.
The move is to help the government control its widening trade deficit on account of ballooning gold imports. Gold coins and bars account for about a third of India’s annual gold consumption of 850-900 tonne.
The Finance Ministry, Reserve Bank of India and Commerce Ministry had met last week to discuss the jump in imports.
Merchandise trade deficit has widened to $13.4 billion in October from $10.6 billion a year ago, as gold imports quadrupled on year-on-year (y-o-y) basis.
Gold imports jumped to 106.3 tonnes ($ 4.2 billion) in October – the highest monthly imports this fiscal year, from 26 tonnes ($1.1 billion) a year ago. Higher demand spurred by the festive season and low prices (Rs 1222.5/troy ounce vis-avis Rs 1316.2/troy ounce a year ago) is likely to have led to the rise in imports of the yellow metal.
RBI eased some gold import norms in May by allowing seven more private agencies to ship in the precious metal, driving a sharp jump in overseas buying despite the 10% duty. RBI eased the norms to eliminate the obstacles being faced by gems & jewellery exporters and bullion traders.
According to the latest Gold Demand Trends report from the World Gold Council(WGC), covering the period July to September 2014, global demand for gold was down just 2% year on year to 929 tonnes (t).
in India, jewellery demand saw a 60% year on year increase to 183t in Q3 2014, the second highest Q3 on record for the country. While the increase is partly reflective of the weakness in Q3 in India last year – when the government introduced import curbs and raised import duties – it also demonstrates the resilience of the country’s appetite for gold jewellery.
Improved consumer confidence in both the domestic economy and the new government led by Narendra Modi added to the positive sentiment, with strong levels of purchasing being seen in the build up to Diwali, WGC said.