The country’s exports of gold products such as jewellery, coins and medallions fell almost 16% in the first quarter of current fiscal from a year before, while the import of raw gold rose nearly 9% during the period.
According to the data compiled by the Gem & Jewellery Export Promotion Council (GJEPC), the gross outbound shipment of value-added gold items hit $2.7 billion during the April-June period, compared with $3.2 billion a year before. In June, such exports dropped 24% from a year before to $601.72 million, showed the data.
But gold imports rose to roughly $7.6 billion in the first three months of this fiscal, against $7 billion in the same period last year. However, even gold imports fell 37% in June — traditionally a lean month for domestic sales — after a 44% surge in the first two months of this fiscal, especially in the build-up to the Akshaya Tritiya in April.
While a general contraction in overall exports seems to have reflected in the shipments of gold products as well, demand from some West Asian nations, which have been hit by a drop in oil prices, remained low in recent months. The country’s overall exports dropped 17% in the first quarter of this fiscal from a year earlier.
The World Gold Council expects Indian precious metal demand to rise to 900-1,000 tonne in 2015 from 841 tonne a year before. However, it added that demand might remain in the lower band of the forecast range following a 25% drop in demand volume and a 26% drop in its value during the June quarter.
India barely produces gold and depends on imports to cater to both domestic and export demand. It purchases the precious metal from overseas and exports value-added products such as jewellery, medallions and coins.
If gold exports continue to fall, it may spell trouble for policy-makers as elevated domestic demand enhances the country’s reliance on imports, while a slowing pace of growth in such exports helps widen the trade deficit and ultimately affect the current account deficit.