Gujarat's gold imports rise 39%, silver down by 70%

Firm prices of yellow metal seem to have failed to dampen the sentiment of goldbuyers in Gujarat. Gold imports to the state has surged by robust 39 per cent in 2009-10 due to increased demand of gold for investment purpose.

However, higher import duty on silver has led to a sharp fall in the import of the commodity during April-March period. Silver import to Gujarat has gone down by 70.2 per cent.

As per the data compiled by Gujarat State Export Corporation Ltd (GSECL), gold imports to Gujarat in 2009-10 (April-March) registered a growth of 39.3 per cent at 215.52 metric tonnes (MT) over previous fiscal's 155 MT. The state witnessed highest import of 29.35 per cent in the month of March.

"There has been a significant increase in gold imports this year," said Samir Mankad, director, GSECL, which facilitates import of precious metals to Gujarat via its air cargo complex at Ahmedabad. It may be mentioned here that Gujarat's gold import in 2008-09 had declined by 20.5 per cent over corresponding fiscal.

Industry players attribute growing investment in the yellow metal to sharp increase in gold imports. "Despite the fact that gold prices averaged between Rs 14,000 to Rs 18,000 per 10 grams during 2009-10, consumers bought the commodity for investment purpose," said Shantibhai Patel, president, Gem and Jewellery Trade Council of India (GJTCI).

Interestingly, the craze for gold jewellery is gradually subsiding and people prefer to purchase gold coins or bars as an investment. "Rising income level is also one of the factors responsible for gold demand," he added.

With the spiralling prices of agri commodities, the disposable income in rural areas has also increased. "Consumers from rural areas mainly buy gold ornaments and they form large part of gold purchases in the state," said Balvant Badani, president, Rajkot Gold Dealers Association.

Sale of land is another reason for significant increase in farmers' income. "The farmers invest the amount received from land sale into gold and gold jewellery," he said.

Meanwhile, silver imports to the state has declined by 70.2 per cent at 423.16 MT in 2009-10 as against 1418.28 MT in 2008-09. Silver prices touched a level of Rs 27,000 per kg during the year. The prices of the precious metal was at Rs 18,500 per kg in January 2009. "Higher price of silver has resulted into lower imports," Banadi opined.

"The custom duty on silver has been increased at Rs 1,500 per kg from Rs 1,000 per kg in this general budget. Earlier, the duty was hiked from Rs 500 per kg to Rs 1000 per kg. This has also contributed to the fall in silver imports to the state," he said.

Also, most importers had imported more silver than their requirement in 2008-09 following lower prices global prices of the commodity, which has resulted into higher inventories in 2009-10.