So it doesn’t look like gold imports are coming down in any way. The government has increased customs duty on Gold to 10% (from 8%). Additionally, excise duty on manufacturing of gold bars will be charged at 9% (from 7%).
Silver, too, goes up from 6% to 10% customs duty and from 4% on 8% excise duty.
The release has some interesting statistics:
India is a major importer and consumer of gold and silver. The quantity of gold imported during 2012-13 was 845 MT valued at Rs. 2, 45,862 crore. The quantity of silver imported during 2012-13 was 1963 MT valued at Rs. 10,691 crore.
Imports of gold and silver have witnessed a surge in recent months. In quantitative terms, the imports of gold increased from 205 MT in April - July, 2012 to 383 MT in April - July, 2013, an increase by about 87%. In value terms, the imports increased from Rs. 56,488 crore to Rs. 95,092 crore, an increase of about 68%. During April-July 2013, silver valued at Rs. 12,789 crore was imported in comparison with silver valued at Rs. 4,281 crore imported during April-July 2012, an increase of nearly 200%.
We’ve imported more silver in the first four months of this year than the WHOLE of last year.
But Gold imports seem to have mellowed, honestly. We’ve seen finance ministry statements saying imports were:
- April 2013: 142 tonnes
- May 2013: 162 tonnes
- June 2013: 32 tonnes
- July 2013: (by subtracting above) 48 tonnes.
That’s not a lot of imports, to be honest. But then, most of the buying comes in the Oct-Nov time of Diwali.
Still it tells you something. With only 48 tonnes – about $3bn of gold being imported in July, the exchange rate still fell 3%. Our average crude import is over $10 bn a month. It simply means that Gold is not the problem anymore.
Official imports won’t change much if the gold being used is smuggled in instead. At this point, the government wouldn’t mind that because that smuggling won’t hurt the rupee! Allowing smuggling has longer term consequences of fuelling other sorts of crime in later years, but this government can’t think that far ahead.
Impact: Gold prices have gone up. The Rupee will slide if it has to anyhow – the gold restrictions haven’t taken it up, and this one won’t help either.