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GST effect? Gold import to nosedive in June after reaching 2-yr high in May

Reason for high import was that traders wanted to replace gold that was not earlier shown on books

Rajesh Bhayani  |  Mumbai 

gold, jewellery, ornaments, bangles

import in May reached nearly a two-year high level at $4,958.6 million. In terms of quantity, it was estimated at 122 tonnes, the highest after March 2015. According to the data provided by the commerce ministry, import in May was the highest after August 2015, when it was $4,958.7 million. The reason for the high import is that traders wanted to replace that was not earlier shown on the books ahead of the goods and services tax (GST). Once that is done, jewellers are in a hurry to sell jewellery ahead of the That is also the reason for the price quoting at a discount in the spot market. However, analysts say in June imports are expected to go down to one-third of what was seen in May. The reason is that there are no festivals around and the marriage season is almost over. Jewellers are eager to sell jewellery ahead of implementation of the goods and services tax.

According to trade experts, import in June is estimated at around 40 tonnes, of which a large share may be of dore, or unrefined gold, and the rest for export. Since the domestic demand is low, little import is expected. prices are quoted at a $2-3 discount in June, discouraging imports. Credit Suisse has said “the rise in deficit is worrying though. May was the fourth consecutive month of strong imports …. If GST/Akshay Tritiya/marriage/lagged impact of are drivers, this should fade, but needs to be watched”, indicating that there is likelihood of import declining. Surendra Mehta, secretary, Indian Bullion and Jewellers Association, said: “is quoting at a minor discount as dealers are liquidating stocks due to the Jewellers also liquidating as they will not get the excise benefit of 1 per cent post After the GST, will attract a 3 per cent rate and the excise, along with the state level VAT, will be subsumed in the In the calendar year 2017, import was 429 tonnes. Though this is much higher than in the past year, “it is expected to remain dull till jewellers get acquainted with the GST”, said a jeweller. The World Council had earlier stated that the jewellery industry will take at least a year to get settled after the is introduced.

First Published: Sat, June 17 2017. 23:06 IST