The jewellers' strike opposing one per cent excise duty on gold jewellery has significantly hit demand for the metal in India, with March imports estimated to have fallen to a new 29-month low of 12 to 15 tonnes. With 70-80 per cent of jewellers going on strike, the gold import bill is estimated in the range of only $600-700 million.
Such low import values were seen in August-September 2013, when the government had imposed restrictions on inward shipments of gold and the whole market was dealing with policy confusion. In those months, imports were 10-12 tonnes.
Market players said imports were virtually on hold.
Read more from our special coverage on "JEWELLERS' STRIKE"
Apart from the strike, many other factors impacted imports of the yellow metal.
The government has tweaked the import duty for refineries by raising it.
This has reduced the difference of duty burden between domestic dore gold refineries and those situated in places like Uttarakhand and enjoying excise holiday. This has crippled the import of dore gold by these refineries, as most of their capacities remain unused after the Budget, with refining not remaining viable and dore not being imported.
Low imports during the past two months have actually helped reduce the overall import bill for the year. February gold imports at 26 tonnes worth $1.4 billion were low as traders were expecting an import duty cut of 2 per cent in the Budget. This has helped keep the overall import bill for the year at around $31.5 billion, down from $34.2 billion in 2015-16.