In July alone, gold imports decreased by 10.65% to USD 3.13 billion, compared to USD 3.5 billion in the same month last year. The drop was even more pronounced in June, with imports plunging by 38.66%, and May saw a decrease of 9.76%. However, April experienced a surge, with imports rising to USD 3.11 billion from USD 1 billion in April 2023.

Jewellers attribute the slowdown to high gold prices but anticipate a rebound starting in September, coinciding with the onset of the festive season and potential benefits from reduced import duties. The government has recently cut customs duty on gold and silver from 15% to 6%.

On August 14, gold prices rose by Rs 300 to Rs 73,150 per 10 grams in the national capital, driven by increased rates in international markets. In contrast, India's gold imports soared by 30% to USD 45.54 billion in 2023-24.

Switzerland remains the primary source of gold imports, accounting for approximately 40% of the total, followed by the UAE (over 16%) and South Africa (about 10%). Gold represents over 5% of the country's total imports.

Despite the decrease in gold imports, India’s trade deficit widened to USD 23.5 billion in July and USD 85.58 billion for the first four months of this fiscal year. As the world’s second-largest gold consumer, India relies heavily on imports to meet the jewellery industry's demand.

Gems and jewellery exports fell by 7.45% to USD 9.1 billion during April-July this fiscal year. India's current account balance showed a surplus of USD 5.7 billion or 0.6% of GDP in the March quarter, with the fiscal year 2024 current account deficit narrowing to USD 23.2 billion or 0.7% of GDP, compared to USD 67 billion or 2% in FY23.

Silver imports surged to USD 648.44 million from April to July 2024, up from USD 214.92 million in the same period last year.

India is also seeking a review of certain provisions in the free trade agreement with the UAE, effective from May 1, 2022. Experts, including the Global Trade Research Initiative (GTRI), have raised concerns over increased imports of precious metals from the UAE under the agreement, which allows unlimited imports of gold, silver, platinum, and diamonds into India with zero tariffs in the future. This could lead to significant revenue losses and shift business from banks to private traders, potentially impacting top suppliers.

GTRI has noted that gold imports from Dubai, currently subject to a 5% duty, could see this drop to zero if the alloy contains 2% platinum within three years. Additionally, some imports may not meet the Rules of Origin conditions, thus failing to qualify for concessions.