This may be music to Chidambaram’s ears. The finance minister’s efforts to curb gold imports are expected to bring down inflow of gold from overseas in the fourth quarter of calendar year 2013 by 71.23 per cent vis-a-vis last year. The country had imported 255 ton during Q4 of calendar year 2012. The fourth quarter is the time of the year when gold demand increases in India.
Bullion traders and jewellers say that India had imported only 23 ton of gold in October for Dhanteras, when the entire country enters into a major gold buying spree. They say imports will not cross 50 ton in the next two months despite the wedding season demand.
Total imports, therefore, will be not more than 73 ton in Q4 CY13, they add. Talking to ET, Haresh Soni, chairman, All India Gem and Jewellery Trade Federation (GJF), said: “In October, the country enters into a festive mode and Indians generally purchase gold with the onset of Navratri. But this year, there wasn’t much enthusiasm among people to buy gold. Though some buying happened during Dhanteras, jewellery sales were still down by almost 30 per cent. There was an 80 per cent reduction in demand for bars and coins. We had imported 23 ton of gold which was higher than September’s import of 11.16 ton.”
The GJF chairman said that in November and December jewellery trade does not see much imports. “It will not be more than 50 ton. People are cautious in spending money for gold.” The drop in gold imports took place after Reserve Bank of India had said on July 22 that a fifth of the gold purchases by importers in every lot would have to be exclusively made available to exporters.
Only 80 per cent of the imports could be used for domestic purposes, and that too for entities engaged in jewellery business, bullion dealers and banks, RBI said. Following this notification, gold imports in July and August dropped to 47.75 ton and 3.38 ton respectively. The finance minister has recently indicated that with the decline in gold import and improvement in exports, the CAD in the current fiscal would be contained at $60 billion, lower than $88.2 billion in 2012-13.
High gold imports was one of the main reasons that pushed CAD –the difference between the inflow and outflow of foreign exchange –to a record high of 4.8 per cent of GDP, or $88.2 billion, in the previous financial year.
Suvankar Sen, managing director, Senco Gold said that while the government’s effort to curb gold imports has worked in bringing down CAD, the uncertainty in the economy and the overall liquidity crisis have also tamed demand in the Indian market. “Big ticket purchases are not happening. Most of the people who had to buy wedding jewellery had already made their purchases during April-May period when prices crashed to Rs 25,000 per 10 gm. Even during the current the wedding season, people are buying smaller items,” Sen said.
Source: economictimes
Source:BullionBulletin