Gold and silver import into India in November was spectacular. According to the DGCIS provisional estimates India imported 148 tonnes of gold, year to date India has imported 745 tonnes, down 3 % y/y.
In 2013 the import duty on gold was raised from 4 % to 10 % and the 80/20 rule was implemented – the latter required all importers to re-export 20 % of all gold imported. On November 28, 2014, the 80/20 rule was suspended, nevertheless India imported the largest amount of gold in November since May 2013.
Why was import elevated? First of all because demand was strong.
Second, I think there has been little obstruction to import gold. Let me explain what I mean with obstruction; the premiums on gold in November averaged a little over 3 % (after subtracting the 10 % import duty). Strong official import and low premiums tell me there is very little gold smuggled into India. When premiums skyrocketed it meant that gold imports were obstructed by the 10 % import duty, the 80/20 rule and the confusion in paper work that initially was caused by the 80/20 rule; tightening supply and raising the premiums. This is confirmed by an inverse correlation between official imports and premiums (falling premiums coincide with rising official imports and vice versa). Now the premiums are low I think there is little obstructing for gold to be imported through the official channels. In November gold importers were still required to pay the 10 % import duty and re-export 20 % of their cargo, however, it seems these procedures were done more efficiently compared to previous months.
In November India imported 1,254 tonnes of silver – a record as far as my data goes back – year to date total import stands at 6,789 tonnes, up 28 % y/y. India is heading to import approximately 7,406 tonnes in total this year. What’s yearly global silver supply again?
Silver premiums are relatively constant in India.