India's import duties do the trick; 77% drop in gold & silver.

NEW DELHI : Gold and Silver imports in India is reported to have suffered a  77% fall  in January, plunging to 1.72 billion. Reflections of stringent import regulations along with the RBI imposed 80:20 norms are noted as the main factors for the remarkable fall.

With the intention of curbing the current account deficit (CAD) of the country, the Government of India had implemented several regulations to control the inbound shipment of gold and silver over a year. The import customs duty on gold which stood at 2% was hiked thrice in 2013 to reach 10% now. As a result, gold import declined drastically, creating a scarcity of stock in the country. It made Indian jewelries difficult to satisfy the increased demand of their customers, especially when the wedding season was active in the month. Gold import in December last year was found to be at $ 1.77 billion which came down to settle at $ 1.72 billion in just a month in January.

According to estimates, gold import in thIe whole year of 2013 was at $ 7.49 billion and is expected to fall further this year as it shows evidence of decline in the beginning of 2014. Considering the import of gold and silver during the time period of April 2013 to January 2014, it was found to plunge by 37.8% to $27 billion when compared to the $46.7 billion import of April 2012 to January 2013 period.

Meantime, the government is pleased with the remarkable narrowing of the current account deficit of the country which was once a reason for their anxiety. The import restrictions according to the Indian officials has helped in reducing gold import to a controllable level which has in turn helped in easing the constantly ballooning CAD. According to Mr. Rajeev Kher, the Commerce Secretary of India, the reduction of CAD is something to celebrate and is expected to decline further more. Govt. targets to lower CAD to $ 50 billion in order to balance the Indian economy.

Source : resourceinvestor.com