Gold imports to India rose 471% year-on-year to a record 160 tonnes in March, a government source said on Thursday, as import tax cuts and price adjustments from record highs attracted retailers and jewelers.
Higher imports of the world’s second-largest bullion may support base gold prices, which corrected nearly 17% from a record high of $ 2,072 in August 2020.
Rising imports could increase India’s trade deficit and push the rupee.
In the March quarter, India imported a record 321 tons against 124 tons a year ago, the source said.
In value terms, imports rose to $ 8.4 billion in March from $ 1.23 billion a year ago.
In February, India reduced import duties on gold to 10.75% tax from 12.5% to increase retail demand and reduce smuggling into South Asia.
“Many consumers have postponed their purchase due to rising prices. They rushed to buy after a sharp price correction,” said Harshad Ajmera, owner of JJ Gold House, a wholesaler in Kolkata.
In March, local gold futures reached an annual low of Rs 43,320 per 10 grams.
Jewelers were building inventory after seeing significant retail demand, said a dealer from a merger in Mumbai with a bank of gold importers.
Last month, dealers charged premiums of up to $ 6 an ounce over official domestic prices, including 10.75% of imports and 3% of sales tax.
Gold imports to India could fall below 100 tonnes in April as jewelers fear the government could impose a blockade to delay growing coronavirus infections, the dealer said.
India reported 72,330 new COVID-19 infections overnight, according to the Ministry of Health on Thursday, the highest since October 11.