Higher duty and new rules dent bullion inflows, say importers...
GOLD IMPORTS by India, the world's largest consumer nation, are falling rapidly after the government imposed new curbs, according to import industry leaders.
May this year saw record levels of gold bullion imports
, as Indian households "front-loaded" their 2013 purchases thanks to the sharp drop in world gold prices, according to Crisil Ltd., the Indian division of financial analysts Standards & Poor's.
Shares in Titan, India's largest jewelers by value, have fallen hard over the last week, because higher import costs are likely to dent their profit margins.
"In the last seven or eight days" since the latest government action – raising import duty from 6% to 8% – "imports have come down significantly," says Bhat.
Further restrictions on how gold bullion
shipments can be financed will also reduce the inflow of gold, says Rajesh Mehta, the chairman of Rajesh Exports. Because for importers buying on credit, only orders placed before the curbs will be able to be imported.
Since the start of 2012, India's government has imposed a range of restrictions on gold bullion imports, which it blames for the country's wide current account deficit.
"The intention of the government," says Bhat, "is that imports have to be curbed and it has begun to work.
This week, however, and following the new measures, the Indian Rupee fell to new record lows against the US Dollar.