India’s gold imports in March 2021 surge by 471% to a record 160 tonnes

India’s gold imports in March 2021 surged by 471 per cent from a year earlier to a record 160 tonnes, as reduction in import duties and correction in prices from record highs drew retail buyers and jewellers alike. In value terms, March 2021 imports surged to $8.4 billion from $1.23 billion a year ago. The surge in imports could increase India’s trade deficit and pressure the rupee.

India imported a record 321 tonnes in the quarter between January and March 2021, up from 124 tonnes a year ago. In March, local gold futures had hit a one-year low of Rs 43,320 per 10 grams. Jewellers were building inventories after seeing robust retail demand. Throughout the month gold was trading at premium because of jewellery demand.  

Higher imports by the world’s second-biggest bullion consumer could support benchmark gold prices, which have corrected nearly 17 per cent from an all-time high of $ 2,072 an ounce in August 2020.

In February this year, India had slashed import duties on gold to 10.75% from 12.5% to boost retail demand and curtail smuggling. Last month dealers charged premiums of up to $6 an ounce over official domestic prices, inclusive of 10.75% import and 3% sales levies.

India’s gold imports in April could fall below 100 tonnes as jewellers fear government could impose lockdown to arrest rising coronavirus infections. India reported 72,330 new covid-19 infections overnight, data from the health ministry showed on Thursday, the highest since 11 October.

A resurgence in virus cases and restrictions on movement and business activity in some states is worrying jewelers as it could threaten the revival in sales. In Maharashtra, which houses the biggest bullion market in the country, non-essential businesses have been asked to stay shuttered for the rest of April as infections soar.

For the entire fiscal 2020-21, gold imports into the country rose by 22.58 per cent to $ 34.6 billion due to increased domestic demand, according to the Commerce Ministry data. Silver imports during the last fiscal, however, dipped by 71 per cent to about $ 791 million. The previous fiscal, 2019-20, gold imports stood at $ 28.23 billion. 

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