Gold has regained its position as the second highest imported commodity in the country in value terms during 2018-19. Crude oil continues to top the country’s import basket.
In 2017-18, gold was displaced by pearl, precious stone and semi-precious stones as the second highest imported commodity by value. A hike in import duties has driven this switch.
The Finance Ministry had in September 2018 increased the customs duty on cut and polished diamonds, lab-grown diamonds, cut and polished coloured gemstones as well as semi-processed, half-cut and broken-diamonds from 5 per cent to 7.5 per cent, and increased the import duty on jewellery articles from 15 per cent to 20 per cent.
“There has been a higher demand for gold from rural India that has pushed up overall imports. In 2017-18, total gold import was 864 tonnes, which rose to 968 tonnes in 2018-19. Doré (a semi-pure alloy of gold and silver) import was at 377 tonnes in 2017-18 and 444 tonnes in 2018-19,” GV Shreedhar, past Chairman at the All India Gems and Jewellery Trade Federation, told BusinessLine .
There was a greater dip in the total pearl, precious stone and semi-precious stone imports. “This is because of the hike in import duty levied by the Centre. There is also more liquidity in gold that has attracted higher imports,” an official aware of the import patterns said.
Analysts had raised concerns as gold import volumes had moderated in 2017-18, but imports of precious stones and pearls did not. “As the latter are hard to value objectively, they hint at capital flight and are worryingly large now particularly given the drop in jewellery exports,” a report released by a foreign brokerage in April 2018 had said.