Gold imports, which have a bearing on the country's current account deficit (CAD), fell about 9 per cent to $24.64 billion (about Rs 1.74 lakh crore) during April-January period of the current financial year, according to Commerce Ministry data. Imports of the yellow metal stood at $27 billion in the corresponding period of 2018-19.
The decline in gold imports has helped in narrowing the country's trade deficit to $133.27 billion during April-January period of the current fiscal as against $163.27 billion a year ago.
Gold imports have been recording a negative growth since July last year. However, it recorded a positive growth in October and November last year, only to contract by about 4 per cent in December and 31.5 per cent in January this year.
India is the largest importer of gold, which mainly caters to the demand of jewellery industry. In volume terms, the country imports 800-900 tonnes of gold annually. To mitigate the negative impact of gold imports on trade deficit and CAD, the government increased the import duty on the metal to 12.5 per cent from 10 per cent.
Industry experts claim that businesses in the sector are shifting their manufacturing bases to neighbouring countries due to the high duty.
Gems and jewellery exporters had asked for a reduction in import duty to 4 per cent. Gems and jewellery exports declined 1.45 per cent to $25.11 billion in April-January this fiscal. The country's gold imports dipped about 3 per cent in value terms to $32.8 billion in 2018-19.
The CAD narrowed to 0.9 per cent of gross domestic product (GDP) or $6.3 billion in July-September 2019 from 2.9 per cent of GDP or $19 billion in the corresponding period last year, according to the Reserve Bank's data. Imports of rough diamonds contracted 15.54 per cent to about $11 billion during April-January 2019-20, according to the data of the Gem and Jewellery Export Promotion Council. However, import of gold bars grew 3.56 per cent to $6.6 billion during the period.Also read: Gold price today: Yellow metal extends gains as coronavirus spreads