India’s gold imports likely to surge a third in 2017: MMTC-PAMP
The Dollar Business Bureau
India’s gold imports are expected to surge by a third this year to 750 tonnes on account of restocking by jewellers and a good rainfall during the monsoon is likely to augment demand in the rural areas in the upcoming festival season, an official of a leading gold refinery said.
Higher imports by India will support the global gold prices, which are already hovering near the peak level in the last two months. The increased imports could also widen the trade deficit of the country.
“Demand and imports are normalising after taking a hit last year. Jewellers are restocking after destocking last year,” Rajesh Khosla, Managing Director, MMTC-PAMP India, India’s biggest gold refinery, told Reuters.
India, the world’s second largest consumer of gold, imported around 557 tonnes of gold last year, the lowest in the last 13 years, as per the World Gold Council (WGC).
In the initial seven months of this year, the country’s gold imports increased two-fold to 550 tonnes compared to the same period a year ago, according to a provisional data by the research and consultancy firm GFMS.
However, the growth in gold imports would gradually weakens in the coming months as jewellers had earlier restocked than normal this year, on the fear of higher taxes, said Khosla.
As part of the goods and services tax (GST) - a new nationwide indirect tax regime that rolled out on 1 July, the tax on gold increased to 3% from 1.2% earlier.
The rupee has appreciated nearly 5.5% against the US dollar so far this year and is trading at its highest level in over two years.
Good rainfall in the monsoon this year will also boost the demand in rural areas during the festive season as around two-third of gold demand in India comes from the rural areas.
The October-December quarter normally makes up for around a third of the country’s gold sales as this is the starting of wedding season and major festivals like Diwali and Dhanteras, when purchasing gold is considered as auspicious.