The Indian government is set to accelerate reforms, including measures to enhance foreign direct investment, speed up divestment, and boost asset monetisation, to maintain economic growth despite rising fuel and fertiliser import costs driven by the West Asia crisis.
The Indian rupee plummeted to a new all-time closing low of 95.81 against the US dollar, driven by surging crude oil prices, persistent inflation concerns, and a strengthening dollar index.
Central bank says it may bring more curbs.
Aimed at curbing gold imports and relying more on domestic supply, the government on Monday linked Gold ETF with gold deposit scheme.
India's gold imports, which have a bearing on the country's current account deficit (CAD), increased 26.7 per cent to $35.95 billion during the April-December of this fiscal due to healthy demand, according to government data. The imports stood at $28.4 billion during the same period a year ago. In December 2023, imports of the precious metal jumped by 156.5 per cent to $3 billion, as per the data released by the commerce ministry.
The customs duty from gold imports could be approximately Rs 8,000 crore, about less than half of what was collected a year ago.
The Strait of Hormuz crisis is impacting lifestyles worldwide, from reduced gold purchases in India to energy conservation in Europe and Japan, as governments urge citizens to adapt to the global energy shock.
The decline in gold imports has helped in narrowing the country's trade deficit to $106.84 billion during the eight-month period under review as against $133.74 billion in the year-ago months.
The finance ministry is considering raising import duty on gold by two percentage points to six per cent, as the surge in demand for the yellow metal threatens to further widen India's current account deficit.
'If the war continue for a longer period of time, it is just a matter of time before the government will pass on some of the price increases.'
India has protected the interest of domestic farmers and MSMEs by not extending any duty concessions on products across several sectors, including agricultural items such as dairy, as well as chocolates, gold, silver, jewellery, footwear, and sports goods, under the trade pact with Oman.
'Once the market decides it wants to go up, it goes up -- no amount of bad news can really hold it back.'
The government has revised gold import data, bringing down numbers for November by $5 billion to $9.84 billion, possibly to rectify double accounting of inbound shipments. According to revised data of the commerce ministry arm Directorate General of Commercial Intelligence and Statistics (DGCIS), gold import numbers have been slashed since April 2024, revealing excess imports of about $11.7 billion during the first eight months of 2024-25.
'The situation globally is quite challenging, but we have the confidence and courage of conviction that we will come out winners even in this challenging time.'
Prime Minister's Economic Advisory Council Chairman C Rangarajan dashes bullion firms' duty cut hopes.
Imports are down also because local traders are clearing unaccounted stock after introduction of 1 per cent excise duty
.jpg)
Attributing the high Current Account Deficit to mainly gold import, Chidambaram said the inward shipments of the precious metal resulted in outgo of $50 billion.
Import is returning to the normal prevailing three years ago
.jpg)
Inflow down in December month-on-month; jewellers demand cut in Customs duty rates
Both the government as well as the RBI took a series of steps to curb imports of gold and other non-essential items in addition to increase foreign exchange inflows.
Dealers are selling gold at a discount of Rs 175 for 10 gm.
Chidambaram said he expected gold imports to touch $40 billion in the current fiscal year to end-March, down 31 percent from the year-ago bill of $58 billion.
By December 2015, the total imports will touch 1000 tonnes.
Import duty on diamonds may be scrapped
Prime Minister Narendra Modi has appealed to citizens to adopt austerity measures, including avoiding destination weddings abroad and reducing edible oil consumption, to mitigate the impact of the West Asia crisis on India's economy.
People across Kashmir have donated generously to Iran, which has been ravaged by war. Donations included cash, gold, silverware, and copper utensils. A woman even donated gold kept as a memento of her husband, who died 28 years ago. The Iranian Embassy in New Delhi has expressed its gratitude for the support.
Some are eying the competitive markets abroad.
The scheme, touted as a panacea to burgeoning CAD, was a huge flop that fostered a spike in smuggling and allowed several Gitanjali-like players to make a killing
India, desperate to trim a gaping current account deficit, took a slew of measures last year to curb demand for bullion
Govt has so far refused to bring down the import duty to 2% from the current 10%.
If CAD remains high for 3-4 quarters, central bank may intervene.
The new baggage rules, 2026, come into effect from midnight on February 2 and replace a decade-old baggage rule.
However, worries on inadequate import and issues for the FTA pacts.
This is good news for the central government at a time when crude oil prices are rising.
'At the first sign of real trouble, that money will move. There will be a run.'
Gold imports are likely to fall below 50 tonnes this month due to sharp fall in exchange rate of rupee and high global prices of the precious metal, according to market experts.
At 12-15 tonnes, the imports in September are estimated to be much lower than in the same month last year.
Gold imports, which peaked at 162 tonnes in May, came down to 19.3 tonnes in November.
India will now face a lower reciprocal tariff of 10 per cent, down from 25 per cent, after US President Donald Trump announced a new global levy on items imported into America in the wake of the Supreme Court verdict against his sweeping duties on several nations.
Prices have remained lower this year.
