Gold imports, which have a bearing on the current account deficit (CAD), fell 6.77 per cent to USD 23 billion during the April-December period of the current financial year, according data from the commerce ministry. Imports of the yellow metal stood at USD 24.73 billion in the corresponding period of 2018-19.
The decline in gold imports has helped in narrowing the country's trade deficit to USD 118 billion during the period, against USD 148.23 billion a year ago.
Gold imports had been recording a negative growth since July last year. However, it recorded positive growth in October and November last year, only to contract by about 4 per cent in December last year.
India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.
In volume terms, the country imports 800-900 tonne 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 this high duty.
The Gems and Jewellery Export Promotion Council (GJEPC) has asked for a reduction in import duty to 4 per cent.
Gems and jewellery exports declined 6.4 per cent to USD 27.9 billion in April-December this fiscal.
The country's gold imports dipped about 3 per cent in value terms to USD 32.8 billion in 2018-19.
The CAD narrowed to 0.9 per cent of gross domestic product or USD 6.3 billion in July-September 2019 from 2.9 per cent or USD 19 billion in corresponding period last year, according to the RBI data.