Gold imports have started showing some revival. In January, a peak-demand month owing to the wedding season, imports were estimated at nearly 40 tonnes - the highest in six months.
In the preceding month, about 20 tonnes of gold was imported. Year-on-year, however, the January figure is about 50 per cent lower.
The recovery is attributable to a rise in domestic demand, export orders and imports by non-resident Indians who are allowed to bring up to 1 kg gold by paying 10.3 per cent duty.
Direct import of jewellery is also estimated to have risen in the last couple of months.
T S Kalyanaraman, CMD, Kalyan Jewellers, says, “January is a month of high gold buying due to the wedding season, so the demand has been higher than in previous months. However, it is still only about half compared to a year ago.”
The increase in imports has also resulted in a fall in the premiums quoted in the physical market. Premiums have halved to $70 an ounce, which works out to about 3 per cent.
Direct import of jewellery has been emerging as a trend in the jewellery business as it is cheaper trouble-free alternative to import of gold, which entails paying import duties, physical market premiums and manufacturing expenses. Cost of imported jewellery is 17.5 per cent higher on average.
“Several organised jewellers have started setting up manufacturing facilities in West Asia, especially in Dubai. They also import jewellery for the Indian market from overseas facilities. This trend is harmful to domestic artisans, many of whom are going jobless,” says Kalyanaraman.
In the September quarter, gold imports stood at 70 tonnes while in the December quarter the figure was 51 tonnes.
A revival in the first month of the March quarter and the possibility of imports sustaining at a higher level in the remaining months could put pressure on the country's current account, which may end up with a deficit higher than estimated earlier. February usually sees high gold demand in north India.
An industry official in Mumbai says there has been good demand from jewellery exporters in recent days.
Compared to an average three-four tonnes a month in the December quarter, value-added exports were estimated at nearly nine tonnes in January, which also contributed to the increase in gold imports.