Gold, silver imports in June dip to lowest in 2013 at $2.45 billion

Steps taken by the government to curb imports of the yellow metal have yielded fruit with the imports of gold and silver dipping significantly to $2.45 billion in June, lowest during the calendar year.

Due to the contraction in imports, trade deficit has narrowed down to $12.2 billion in June. The deficit had widened to a seven-month high of $20.1 billion in May.

"The decline in gold and silver imports can be attributable to the steps taken by the government, especially by the RBI (Reserve Bank of India). I think that might have translated into lower imports of gold," Director General of Foreign Trade (DGFT) Anup Pujari told said.

The fall in the trade gap would also help in bridging the widening current account deficit (CAD).

CAD has been estimated at 4.8 per cent of the GDP in 2012-13 as against the RBI's comfort level of 2.5 per cent.

High CAD puts pressure on the domestic currency and can expose the economy to balance of payments problems.

During January, February, March, April and May, the gold and silver imports stood at $7.4 billion, $5.7 billion, $3.3 billion, $7.5 billion and $8.4 billion, respectively.

To curb demand, the government hiked the import duty on gold three times in a year and raised it recently by 2 percentage points, to 8 per cent. Besides, the RBI too has put restrictions on banks on importing gold.

Gold imports have plunged by over 80 per cent in June as government measures, including a hike in customs, duty tapered demand. The imports in June are said to have fallen to around 31 tonnes, down from 162 tonnes in May and 141 tonnes in April.

India is the largest importer of gold and the precious metal is mainly utilised to meet demand of the jewellery industry. The imports stood at around 830 tonne in 2012-13.