Gold imports during March surged to 160 tonnes on account of duty cut to 7.5 per cent, reduction in prices of the precious metal and rise in demand in export markets, Gem and Jewellery Export Promotion Council (GJEPC) said on Tuesday.
The gold imports during March 2019-20, stood at 28.09 tonnes, according to the GJEPC data.
GJEPC noted that the surge in gold import is mainly due to the rise in demand for gem and jewellery products from exports markets like the US, UK following lockdown relaxation, the wedding season in India, improved business and consumer sentiments and as well a recent sharp drop in gold prices.
There are many factors that pushed up the demand for gold like festive time in the domestic market and various countries during the said time, resumption of mining and exporting activities, resumption of production activities in domestic and global market, development of vaccine and start of vaccination and relaxation over the travel, GJEPC observed.
"We should observe the overall market trends in a holistic manner in the forthcoming months to arrive at a rightful conclusion. Factors such as low base effect, reduction in the gold price, reduction in import duty may be attributed to the increased imports in the country in this period. An important observation is that from an average import of about 80 tonnes a year in 2018-19, is down to 50 tonnes last year," GJEPC Chairman Colin Shah said.
"Growth in imports of gold indicates the positive sentiment in the domestic and international market, Shah said adding that GJEP expects growth in jewellery exports in the current fiscal.
Additionally, he stated that the rise in demand is also impacted by the reduction in gold prices.
Gold prices have seen a phenomenal drop and customers and investors see an opportunity as the current prices may not sustain in future, Shah said.
Gold prices have declined on an average to Rs 40,179 in March 2021, which is the lowest through the financial year from April 2020 to February 2021, according to GJEPC.
"The import duty reduction has encouraged imports through official channels. The gold duty cut by the government is not much but it has helped bring duty at par with other countries and more formal import of the metal through official channels," Shah added.