Falling gold price is expected to improve demand and hence imports. Industry estimates import in quantity terms to go up by 5-7% as demand likely to go up in coming months. However in value terms import bill is unlikely to be much higher. This also means that gold is no more a pressure point for current account deficit.
In fact some euphoria was seen in June in imports as it was higher to 97 tonnes following RBI granting permission to import gold to start trading and export houses. However later on euphoria has does down as in following months imports is averaging around 50 tonnes as demand was not coming up.
Import in July-August is estimated at 45 and 50 tonnes respectively.
Gold imports in 2013-14 was 638 tonnes, a decline of 25% from 845 tonnes in the previous fiscal. In value terms import bill was $28.7 billion in FY14. This year gold imports are estimated around 675 to 700 tonnes. In April to August this year 316 tonnes of gold has been imported officially and import bill was $11.5 billion.
Aman Mohunta, Economist, Nomura said, ‘We expect gold import bill to be around $30-35bn compared to $28.7bn.’ Interestingly gold prices have been lower this year. And hence it given room for import going up without any significant increase in value of imports.
This post was published at TruthinGold on September 22, 2014.
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