Import of gold into India dropped significantly in December and January, with lack of demand playing a significant role in it. While imports stood at 54.1 tonnes in December, they fell to 53.2 tonnes in January.
Overall gold imports from April 2016 to January 2017 stood at 546 tonnes. This is a 38% drop from the 892.9 tonnes of gold imported during the same period last year.
While the month of November saw a spurt in gold imports with 119.2 tonnes being imported, there has been a steady drop ever since. Demonetisation and the lack of currency to make gold purchases was a key reason for drop in numbers.
Over 80% of India’s gold jewellery purchases take place through cash, with the shortage following the move to demonetise Rs.500 and Rs.1,000 notes impacting buyers and sellers alike.
Demand for gold had peaked immediately following the move, with jewellers and agents selling gold at inflated rates, with those with black money paying exorbitant amounts to dispose old notes.
Following this, the government made it mandatory for the PAN details to be provided for gold purchases exceeding Rs.2 lakh. According to the chairman of All India Gem and Jewellery Trade Federation, the percentage of cash payments have dropped from 80 to around 45% following this move.
India’s gold imports stood at 968 crores in 2015-2016, with the downward trend expected to continue. The country is the second largest consumer of gold in the world following China.