Chennai: The country’s gold imports dropped in FY19 both in volume and value terms. Gold imports were down 5.8 per cent to $32.8 billion and volume-wise it was two per cent down at 789 tonnes.
In FY18, the country had imported 804 tonnes valued $33.57 billion. In the month of March, the country imported 78 tonnes, which was 45 per cent up from 53.7 tonnes in the same month last year. In March imports this year was valued $3.2 billion.
Gold imports in value terms have been shrinking for the past few months except January. It recorded negative growth in October, November and December 2018, but grew by 38.16 per cent in January this year. It again contracted by 10.8 per cent in February.
Of the total imports, the quantity of dore increased to 300 tonnes in FY19 against 232 tonnes in the previous fiscal and the domestic refineries have been expanding capacity.
According to trade experts, softening prices of the yellow metal in the international market and subdued demand would have led to contraction in imports. Gold was available for a discount in the wholesale market for a longer time during the year. The demand was also slower in the retail market.
Further, the demand has been declining as the slump in the rupee made the metal more expensive in the Indian market compared to the levels in the international market. The market adopted a wait and watch policy for the rupee to turn favourable before making overseas purchases.
“Before GST, most of the traders had stocked up heavily and part of this inventory came to the retail market in FY19. Moreover, the demand in the southern states, especially the flood-hit Kerala, was down. Lower farm incomes affected the rural demand of the metal,” said Debajit Saha, Senior Analyst, Precious Metals Demand, South Asia and UAE, GFMS Thomson Reuters.
After the Nirav Modi- PNB scam, banks cut their credit exposure to jewellers and this led to slower store expansion. This in turn affected inventory building, he added.