Commerce dept examining 'unusual' surge of 331% in gold imports in Nov

Trade data released on Monday showed that India's trade deficit reached a fresh high of $37.8 billion in November, driven by a surge in merchandise imports

Amid an ‘unusual’ 331 per cent year-on-year surge in gold imports in November, the Directorate General of Commercial Intelligence and Statistics (DGCIS) under the Department of Commerce has initiated a thorough review of the import data for the yellow metal, sources said on Wednesday.

 

“Upon noticing the unusual surge, DGCIS has taken up a detailed examination of the gold import data, with reconciliation to be done against data received by the Central Board of Indirect Taxes and Customs,” a commerce ministry source told Business Standard.

 

Trade data released on Monday showed that India’s trade deficit reached a record high of $37.8 billion in November, influenced by a rise in merchandise imports, especially inbound shipments of gold.

 

According to the data, India imported $14.9 billion worth of gold, comprising 21 per cent of merchandise imports that month.

 

Department of Commerce officials said that the surge in gold imports was influenced by nearly a 30 per cent increase in prices.

 

A Bloomberg news report said that India’s record gold imports were primarily due to a calculation error. Officials reportedly double-counted gold shipments in warehouses after a change in methodology in July. Efforts are underway to reconcile the data, which may have been overestimated by as much as 50 tonnes in November.

 

If the error is identified, trade figures are likely to be revised, and traders may see a correction in the foreign exchange rate. This would also ease mounting speculation about the state of the economy, as economists pondered whether the surge in gold purchases signalled distress and a need to hedge against inflation, or prosperity in the hinterland triggered by a healthy crop.

 

Until June, bills of entry for ‘warehousing’ and ‘ex-bond goods’ — both not considered imports — were processed by SEZ Online, a Department of Commerce system, while the bill of entry for ‘house consumption’ (considered actual imports) was handled by the Indian Customs Electronic Commerce/Electronic Data Interchange (ICEGATE). Since July, ICEGATE has integrated both custodian and consumption data into a common system for faster data dissemination.

 

The double-counting may have gone unnoticed previously but became apparent only in November, when domestic prices dropped at least 10 per cent below international levels, leading to increased purchases that disproportionately pushed up import figures. Some sources suggested that total gold imports could still fall within the usual 800-1,000 tonnes annually, though the final reconciliation has not yet been arrived at.