Koos Jansen
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Koos Jansen
Posted on 12 Jun 2014 by

March Indian Gold Import Highest In 10 Months

A remarkable increase in official gold import in March, according to numbers published by India’s customs department DGCIS this week. In March official gross gold import accounted for 60 metric tonnes, up 88 % from 32 tonnes in February. The DGCIS does not disclose export figures of gold and silver, though (in March 2014) Indian law dictated 20 % of all gross gold import was required to be re-exported. That makes official net gold impor 48 tonnes in March – calculated by the 80/20 rule.

The jump in official gross import is significant because the Indian government tries to hold down gold import since it sky rocketed in April and May 2013, after the price of gold had crashed. The import duty on the yellow metal was raised from 6 % to 8 % in June 2013 and to 10 % August, when the 80/20 rule (20 % of all import needs to be re-exported) was also implemented. As a result of these measures gross import fell 73 % to 44 tonnes in June, from 165 in May 2013.

Demand for gold in India has little impact from the government measures, according to institutional consultant Jayant Bhandari. Supply simply circumvents the official channels and is smuggled into the country. How much is exactly smuggled in is very hard to tell. However, official import can be an indicator for total import. Jayant wrote me it’s likely that at this moment Indians are pending their gold purchases as India choose a new government in May, which is expected to lower the import duty this year. If the import duty is lowered demand is expected to increase.

India gold trade March 2014

The premium on gold in India over the international price hovered around 15 % in March, that’s including the 10 % import duty. The next chart is complied by Nick Laird from sharelynx.com.

India Gold Premium 2014

Demand for silver in India has risen since the import restrictions on gold were introduced. In 2013 gross import was a staggering 6125 tonnes, up 190 % from 2115 tonnes in 2012. Year to date gross import is 1208 tonnes, up 59 % from 760 tonnes in the same period in 2013. March 2014 gross import was 287 tonnes, down 37 % from February. I do not yet have any export numbers on silver in March.

India silver trade March 2014

[youtube https://www.youtube.com/watch?v=4T-b6tUT-hY]

Koos Jansen
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  • ramu

    Most people in India are holding back to buy in July after Modi’s budget is over and the Gold tax changes if at all. Following that will be marriage season towards second half of year. Gold price in India fell in last few weeks as global gold price fell and rupee rose after Modi election. About 10% price fall over all. People expect another 10% fall if taxes removed. Most demand will come after July regardless of what happens. I never saw any gold shortage after the taxes, 20% export and limited import rules came last few months. Most people were unwilling to pay the extra artificial premium especially investors. Besides banks which were pushing 24kt gold coins to retail customers at heavy premium calling it investment stopped after govt asked them to. Even jewellers officially stopped selling 24kt gold coins in solidarity with govt. But 22kt coins and jewellery is unaffected. General gold demand especially for jewellery was always there and I guess most of that came from smugglers. Modi’s plan is to boost exports and reduce current account deficit and have a strong rupee. Exports rose 12% in May. So gold tax might be reduced if not eliminated in July.

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