India's gold imports in March are estimated to have risen to nearly 50 tonnes, the most since the Reserve Bank of India's (RBI's) import curbs came into force in May last year. According to analysts tracking gold, this surge could have been mainly due to high imports during the last week of the month.
With the yellow metal's prices moderating and amid expectations that the curbs might be relaxed, market players believe gold imports would stay high for some time.
The precious metal is understood to have arrived in large quantities through official channels, including direct import by export-oriented units, in the last week of March. The rise in flow could have also been because the five banks allowed to import gold have become more active in the business.
On Monday, RBI Governor Raghuram Rajan's comments hinting at some relaxation in gold import curbs, besides an increased flow of imported gold, helped cool spot market premiums for delivery to $35 an ounce from $45-50 a week earlier.
According to some experts, currency movements have also helped bring down gold prices. T Gnanasekar, director at Commtrendz Research & Fund Management, says: "Domestic gold prices are under pressure due to a falling rupee. The Indian currency is seen appreciating in the coming quarters. The government, now more comfortable on the current account deficit front, could keep the duties intact but remove the conditional export clause. Imports will improve if such a decision is taken before Akshaya Tritiya".
On May 13 last year, the RBI had first asked banks not to import gold on a consignment basis, as imports had surged significantly in the preceding weeks. The import pressure was such that 300 tonnes of gold had been brought into the country in less than two months. This was followed by rules that linked imports with exports - under the 80:20 rule, 20 per cent of imported gold was asked to be exported, while the remaining 80 per cent could be for the domestic market. Along with a 10.3 per cent import duty, these measures significantly brought down gold imports through official channels - even to a virtual halt, as there were certain ambiguities in the rules. Later, imports came down to 51 tonnes in the December quarter.
In the March quarter, however, the imports are expected to be double those in the previous quarter.
The price of gold has come down to under Rs 29,000 per 10 grammes, compared with Rs 31,000 a fortnight ago. Standard gold price in Mumbai's spot market, Zaveri Bazar, closed at Rs 28,950 per 10 g on Saturday.