Gold Glitters: India's Import Surge Amid Festive Frenzy

India's gold imports hit a record USD 14.86 billion in November, driven by festive and wedding demands. Imports rose 49% to USD 49 billion from April-November 2023. This surge, influenced by asset diversification and reduced customs duty, impacts India's trade deficit, prompting free trade agreement reviews.

India's gold imports surged to an unprecedented USD 14.86 billion in November, fueled by festival and wedding season demands. This marks a fourfold increase, shedding light on the country's burgeoning reliance on the precious metal. Data from the commerce ministry highlights a 49% increase in cumulative imports from April to November 2023, totaling USD 49 billion compared to the previous fiscal period.

The staggering jump in gold imports, attributed to a combination of favorable asset returns and investor confidence amidst global uncertainties, has pushed India's trade deficit to a record USD 37.84 billion in November. With Switzerland, the UAE, and South Africa as major sources, the metal accounts for over 5% of total imports. However, the rising imports have intensified the country's current account deficit, widening it to USD 9.7 billion in the April-June quarter of 2024.

This import trend has spurred discussions for revisiting trade agreements, particularly with the UAE. Concerns have emerged over specific provisions in the Comprehensive Economic Partnership Agreement (CEPA) that allow unrestricted imports of precious metals at reduced tariffs, potentially reshaping the import landscape and affecting revenue and supply dynamics.

(With inputs from agencies.)