Gold rates have been soaring in the global market since the past few months. This year, gold rates have increased to 38.4% in the global market and 34% in the Indian market. In the last 10 years, gold imports in India never fell below 400 tonnes. However, this year, gold imports hovered around 380 tonnes due to the hike in gold rates.

In the past, the demand of gold remained between 600 and 800 tonnes on an average. It was only during 2002-03 that gold imports had fallen to about 500-550 tonnes. According to the data by Indian Bullion Market Association (IBMA), gold imports had dropped to 413 tonnes in 2008-09, as compared to 757 tonnes in 2007-08.

Drop in gold imports

“India is supposedly the largest consumer of gold and imports a large amount of the yellow metal from other countries. Therefore, gold prices in India mainly depend on the gold import rates. There has been a dip in gold imports in the last 2 years owing to the sudden hike in gold prices and volatile rupee,” says Shirdhar Kumar, proprietor of Niki Jewels, a gold manufacturer and exporter in Hyderabad.

Some jewellers and traders are cautious while importing gold and do not import gold when the Indian currency is strengthening. As a result, the price of gold in the domestic market is relatively low, despite its increase in the foreign market.  

“Increase in gold prices has led to a drop in the demand for the yellow metal,” says Neil Mullick, proprietor of USI Gems, a small-sized gold manufacturer and exporter in Allahabad. However, importers expect gold imports to surge only if the price of gold continues to remain at a moderate level. This will also attract more consumers to purchase gold and result in an increase in the demand for the yellow metal.

Sabrina Mitchell