Gold imports stay at five-year low.

AHMEDABAD: The 2013-14 financial year ended on Monday, but there is no sign that gold imports in the state will recover to their earlier levels in the near future. In fact, figures for the end of 2013-14 show that imports of the yellow metal had refused to improve from a level lowest in five years.

The reasons for the stagnation in gold imports have also not changed. The restrictions imposed on gold imports by the central government in June 2013 added to the cumulative impact of the economic slowdown, high prices of the yellow metal and a weak rupee on gold imports. As on Monday, imports of the yellow metal in 2013-14 were at a five-year low.

From April 2013 to March 2014, imports of the yellow metal in Gujarat could not cross even 100 metric tonnes (MT), making this financial year the worst in terms of imports.

According to the latest figures, only 92 MT of gold was imported from April 2013 to March 2014 compared to 193 MT in 2012-13, down 52.24%.

In March 2014, 5.37 MT of gold was imported compared to 8.19 MT in March 2013. Over 1 MT of gold made its way into the state's markets in February this year. Half the gold imports in March 2014 were by the State Trading Corporation.

"Volatility in the premium on gold in the international market, high gold prices and customs duty has affected imports. Weakening of the rupee has also led to inconsistency in duty on gold and its prices," said Monal Thakkar, president, Amrapali Industries.

In June 2013, the central government had imposed restrictions on gold imports to control the current account deficit. This had reduced imports of the yellow metal to a minimum. But in September 2013, the Centre eased the restrictions and the RBI introduced the 80:20 scheme, under which 20% of the gold imported had to be re-exported. The central government also raised import duty from 6% to 10%. This led to more shortfalls in the availability of gold.

"Gold smuggling has started once again. A considerable amount of illegal gold has made its way into the market and has been affecting traders adversely," said city-based bullion trader, Girish Choksi. Bullion traders want the new government to come up with a flexible policy for gold and silver imports which could withstand the global slump, a fluctuating rupee and also put an end to gold smuggling.

Thakkar said that the premium on the yellow metal in the international market had come down from US $110 to US $40. "Yet it has not been able to revive gold imports in the country," Thakkar said. Gold prices remained in the Rs 28,000-Rs 31,000 range during this period which also saw consumer preference shifting towards silver.

Restrictions on gold imports and change in customer preferences have triggered a record growth in silver imports. According to the latest data, silver imports crossed 1400 metric tonne (MT) in 2013-14, a record for the past five years. Around 1425 MT of silver was imported from April 2013 to March 2014 compared to 486 MT in the same period in 2012-13, recording a growth of 193%.

In March 2014, however, silver imports were down by more than 250% at 0.41 MT compared to 28 MT in March 2013. The reason for this was the recent increase in the import duty on silver. Experts believe that restrictions on gold and increased industry usage of silver have led to rise in the demand of silver.

Source : timesofindia.indiatimes.com