India's gold imports rise 21.78% to $27 billion fuelled by domestic festive season demand

India's gold imports rose 21.78 per cent to $27 billion during the first two quarters of the financial year 2024-25 due to strong demand from the domestic market, news agency PTI reported, citing government data on Wednesday, October 30.

The report noted that precious yellow-metal imports, which affect the nation's current account deficit (CAD), increased from April to September, compared to $22.25 billion in imports from April to September of the financial year 2023-24. 

According to an industry expert cited in the agency report, the ongoing demand for gold this year's festive season is helping to increase gold imports.

In the year 2023-24, India's total gold imports rose 30 per cent to $45.54 billion. Switzerland is the largest exporter of gold, with close to 40 per cent share, followed by the United Arab Emirates (UAE) with nearly 16 per cent, and South Africa with about 10 per cent, reported the agency.

Gold accounts for more than 5 per cent of India's total imports.

India Financials

The rise in gold imports into the country has pushed India's trade deficit, which is the difference between imports and exports, to $137.44 billion in the first half of the current financial year, compared to $119.24 billion in the same period in the previous financial year, as per the agency report. 

After China, India is the world's second-largest consumer of precious yellow metal. The majority of the imports are for the country's jewellery industry. The shipments reduced 10.89 per cent to $13.91 billion during April-September 2024-25, the PTI report said.

According to the report, India's Current Account Deficit (CAD) widened marginally to $9.7 billion, or 1.1 per cent of the country's gross domestic product (GDP), from April to June 2024, compared to $8.9 billion, or 1 per cent, in the same period the previous year. 

A current account deficit occurs when the value of the goods and services imported and other payments exceed the value of the country's exports and other receipts in a particular period. 

Silver imports also increased 376.41 per cent to $2.3 billion during the first half of the financial year 2024-25, compared to its $480.65 million levels from April to September 2023-24.

According to the report, in this year's Union Budget, the government reduced customs duty to 6 per cent from 15 per cent.