India’s gold imports, which are closely linked to the current account deficit, have dropped by approximately 30% to $31.8 billion during April-February 2023, according to data from the commerce ministry. This decrease is attributed to the high customs duty on gold imports and global economic uncertainties.

During the corresponding period of 2021-22, gold imports stood at $45.2 billion. However, silver imports during April-February 2023 rose by 66% to $5.3 billion.

Despite the significant fall in gold imports, it has not helped in narrowing India’s trade deficit, which is the difference between imports and exports. The merchandise trade deficit for April-February 2022-23 was estimated at $247.52 billion, up from $172.53 billion in the year-ago period.

Industry experts have noted that the high import duty on gold and global economic uncertainties are the primary reasons for the decline in the imports of the precious metal. The former GJEPC chairman and managing director of Kama Jewelry, Colin Shah, stated that India imported about 600 tonnes of gold during April-January 2023, and it is down because of the high import duty. He further emphasized that the government should take a view on the duty part to help the domestic industry and push exports. Additionally, any surge in gold prices dampens gold demand, coupled with the sale of old gold, and another factor is the higher duty that encourages unofficial routes of gold imports.

India is the world’s largest importer of gold, which mainly caters to the demand of the jewelry industry. The country imports 800-900 tonnes of gold annually in volume terms.

However, the gems and jewelry exports declined by 0.3% to USD 35.2 billion during the 11 months of the last fiscal year.

Last year, the Indian government increased the gold import duty from 10.75% to 15% to check the current account deficit (CAD). Nonetheless, the decrease in gold imports has not aided in reducing the trade deficit, highlighting the need for comprehensive measures to address India’s trade imbalance.