Despite the Indian economy stooping down due to the execution of Goods and Service Tax (GST), dull demand season and strong restrictions on export houses, gold imports in the September quarter doubled.
According to a GFMS Thomson Reuters gold survey released on Thursday, “The September quarter’s official gold imports were 132.7 tonnes, representing a 66 per cent rise.”
Due to a loophole in the import policy after implementation of the GST, 33 tonnes of gold is estimated to have been imported from South Korea during July and August under a free trade agreement. If these imports are considered, official gold imports during the September quarter were 165.7 tonnes, more than double the imports in the same quarter a year ago.
The April-September gold import bill is $17 billion, up from $7.9 billion in the same period a year ago. The gold import bill for 2016-17, according to the commerce ministry, was $27.4 billion.
Smuggling of gold was rampant during the September quarter. The GFMS survey states 46 tonnes of gold were imported unofficially during the quarter, up from 25.2 tonnes in the same period a year ago. The smuggled gold was used to replace official gold as jewellers sold unofficially imported bullion to customers but showed such sales against exchange of old jewellery, the report added.
“Demand from agricultural households is estimated to increase by 21 per cent in the 2017-18 crop year based on our econometric model studying the relation between the monsoon and gold demand. This is likely to have a positive impact on the unofficial gold trade, given most of the transactions are likely to be in cash,” the report said.
Imports increased at a time when gold demand fell after the GST was rolled out. In August, the government issued a notification bringing the jewellery trade into the ambit of the Prevention of Money Laundering Act, requiring customers to submit their proof of identity to jewellers, who were required to report all trades above Rs 2 lakh. The report said jewellery demand for gold during the September quarter was 141 tonnes, 17 per cent higher than in the same period a year ago, while investment demand was 10 per cent higher at 24.3 tonnes.