India gold imports witness 'phenomenal surge' during Nov '14

MUMBAI (Scrap Monster): The gold imports by the country surged higher during the month of November this year, pushing the trade-deficit to 18-month high. The country’s gold imports during the month totaled 151.58 Tonnes, according to data released by Trade Ministry. The November imports are 38% higher when compared with the imports of 109.55 Tonnes during the previous month. Also, gold imports, by value, have increased 34% to $5.61 billion during the month.

The Trade Ministry has decided to weigh the impact of change in gold import rules implemented during the previous month. The government, in a surprise move, had abolished the 80:20 rule, whereby traders were required to export 20% of all imported gold. Rajeev Kher, Trade Secretary, announced that the government would review the impact of the revision of gold import rule and would take a call at appropriate time.

Traditionally, the country’s gold imports tend to remain on higher side during the second half of the year, mainly on account of auspicious occasions, festivals and wedding season. According to industry experts, gold imports are expected to fall during the month of December, mainly due to the culmination of wedding season demand.

The spike in gold imports has raised fresh concerns of the country’s widening current account deficit situation. Gold import bill surged six-fold when compared with $835.83 million in the same month in 2013. Though low crude oil prices may provide some cushion, the huge jump in gold imports are sure to cause fresh worries to both the government and the Reserve Bank of India (RBI).