New Delhi: India’s gold imports jumped to a new high of $14.86 billion in November 2024, a 4X rise over $3.44 billion in the year-ago period, according to commerce ministry data. The surge in demand for the yellow metal was driven by the festive rush and the wedding season. Overall April-November imports jumped 49 per cent year-on-year to $49 billion from $32.93 billion a year ago.
Gold returns soared to 25 per cent on an annual basis. Gold prices have witnessed an unprecedented surge and immense volatility this year owing to global geopolitical uncertainties. Central banks’ gold buying has also driven up prices of the precious metal. Gold prices rose 23 per cent to Rs 78,350 per 10 gm so far this year in Delhi.
Key factors contributing to gold demand
The Centre’s decision to slash the duty on gold imports resulted in a major fillip to demand for the precious metal in India. Finance minister Nirmala Sitharaman announced a duty cut on gold imports to 6 per cent from 15 per cent during the Budget this year. India’s gold imports were up 30 per cent to $45.54 billion in FY24.
India follows China as the world’s second largest consumer of gold with a focus on jewellery. While gold imports stood at $37.84 billion compared to exports worth $17,43 billion in November. This led to a widening of India’s current account deficit (CAD) to $9.7 billion, or 1.1 per cent of the GDP, compared to $8.9 billion in April-June 2023. When a country’s imports exceed its exports, it drives up the CAD.
India-UAE FTA review
Under the India-UAE free trade agreement, gold imports have risen in India, thus driving up the CAD. This has led to demand from multiple quarters for a review of this FTA. According to the think tank Global Trade Research Initiative (GTRI), the FTA, which allows for unlimited precious metal imports covering gold, silver, platinum and even diamonds, is likely to result in a significant loss of revenue per annum. This is likely to result in primary supply shifting to Dubai-based traders as opposed to private Indian traders and banks.
India’s gold imports rose to $14.86 billion in November 2024, compared to $32.93 billion in the year ago period, according to commerce ministry data. Lower import duty as well as the onset of wedding season helped to drive up imports of the precious metal. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
