Gold imports crawl in Dec

Only 15 tonne imported in the first half of the month due to adequate supply in the market, tepid demand

Despite the government removing restrictions on gold imports late past month, imports of the precious metal have not picked up because of a supply glut.

Industry sources say hardly 15 tonne of gold has been imported in December so far on consignment basis. For two weeks after government lifted the 80:20 scheme, there were absolutely no imports, they added.

Under the consignment route, importers have to make payments to overseas sellers only after the goods are sold and proceeds realised. Before May 2013, when the consignment route was banned for gold imports, most imports were done using this route.

“Post 20:80 scrapping, imports continue to happen from dore refiners and agencies other than banks on consignment basis. However, it is very limited due to existing supply glut and slack demand due to price sensitivity and seasonal reasons, ” said Sudheesh Nambiath, senior analyst-precious metals, GFMS Thomson Reuters.

“Higher prices have also added to unofficial supplies leading to further pressure,” he added.

Meanwhile, gold prices are being quoted at a discount because of oversupply and lack of demand.

The supply is high because of heavy imports earlier. Traders have also started importing gold jewellery from Indonesia under the free trade agreement by paying just 1 per cent duty. Reports suggest that even 24 carat jewellery is being imported under this route. Such imports are coming in at New Delhi and Hyderabad.

The demand is also weak as the first phase of marriage season has ended.  

Traders also cite lack of clarity in the import policy. Banks have stopped importing gold as they are concerned about meeting export commitment for gold imported till November 28 when the government scrapped its 80:20 scheme.

Haresh Soni, president of the Gem and Jewellery Trade Federation said, “We want the Reserve Bank of India to clarify guidelines governing imports.”

His said at present enough gold is available and it is selling at discount but later when demand revives after a month, lack of clarity could jeopardise trade.