Gold imports more than double in July, courtesy GST

By: | Updated: August 9, 2017 3:50 PM

A World Gold Council report had estimated that the demand for gold would take a hit due to the higher rate of tax under the new tax regime.

gold prices, coin makers, New York, silver, bullion market,Raksha Bandhan, eight gram gold priceAccording to World Gold Council, consumption of gold is estimated to be in the range of 650 tons to 750 tons this year. (Image: Reuters)

Gold imports have more than doubled in July, due to the arrival of delayed shipments booked ahead of the implementation of goods and services tax on the first of July, said a Bloomberg report. Inbound purchases totaled 53.4 metric tons last month, up from 22 tons a year earlier, said the report citing unidentified sources. According to World Gold Council, traders and dealers stocked up on gold inventories ahead of the levy of the national goods and services tax on fears of a higher duty. The Council expects the  demand to slow down in the second half of 2017 as buyers take time to transition to the new regime. According to WGC estimates, consumption is estimated to be in the range of 650 tons to 750 tons this year.

“Such an increase in imports is not sustainable because the demand from the consumer side in the market is very slow and interest from the investment side has also dried up on low returns,” Bloomberg quoted a director with the All India Gems & Jewellery Trade Federation, Bachhraj Bamalwa as saying. According to data from, gold has given negative returns, falling 11% in the last one year. Even the long term 5-year return of negative 10.5% is indeed very dismaying, especially given the buoyant returns on the Indian equity benchmark Sensex.

Earlier, the Council had published a report titled “GST’s impact on India’s gold market”. According to the report, GST would be disruptive in the short term as the industry adjusts to the new tax regime.The report says that manufacturers’ and retailers’ working capital could be tied up because of inter-state gold stock transfers. Gauging the impact on the unorganised sector, the report said that small-scale artisans and retailers with varying degrees of tax compliance may struggle to adapt. The report had estimated that consumer demand would take a hit due to the higher rate of tax in the short term.

According to the report, GST represents a radical step forward for India’s economy. While it could present short-term challenges to the gold industry, the council believes it will boost the economy and make the gold industry more transparent to the benefit of gold buyers. The council estimated that the new tax regime would support India’s gold demand. As per the estimates the demand is seen rising to 850-950 tonnes by 2020. Gold was trading at Rs 29,463 per 10 grams on Wednesday.

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