India's gold import saw a 252 per cent rise to $24 billion in April-September period compared to the corresponding period last year with the gradual unlocking of the economy and festive demand picking up.
Gold imports jumped to $5.11 billion in September alone compared to a little above $600 million in the same month last year, the government data showed. In the April-September period last year, India imported gold worth $6.8 billion.
Another reason for the spike in gold import could be the government lowering import duty on the yellow metal in the Union Budget of 2021-22 to 7.5 per cent from the existing 12.5 per cent.
Gold demand had fallen sharply in 2020 by 35 per cent to 446.4 tonnes, the lowest since 1994, due to the pandemic driven lockdown. The lowering of import duty was expected to help boost demand for gold in the world’s second largest bullion market. Besides, it was expected to make gems and jewellery exports globally competitive.
The gems and jewellery exports rose to $19.3 billion in the April-September period this year as against $8.7 billion in the same period previous year.
But such a whopping gold import also led to a record widening of the country's trade deficit to $22.6 billion during September as against $2.96 billion in the year-ago, data showed.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry. In volume terms, the country imports 800-900 tonnes of gold annually.
High duty on gold had made India’s exports uncompetitive leading to large Indian diaspora moving to Dubai, Hong Kong or other centres to buy jewellery.
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