Gold imports, which have a bearing on the current account deficit (CAD), fell 6.77 per cent to $23 billion during the April-December period of the current financial year, according to data from the commerce ministry. Imports of the yellow metal stood at $24.73 billion in the corresponding period of 2018-19.

The decline in gold imports has helped in narrowing the country’s trade deficit to $118 billion during the period against $148.23 billion a year ago. Gold imports had been recording a negative growth since July this year. However, it recorded positive growth in October and November last year, only to contract about 4 per cent in December last year. India is the largest importer of gold, which mainly caters to the demand of the jewellery industry.

In volume terms, the country imports 800-900 tonnes of gold annually. To mitigate the negative impact of gold imports on trade deficit and CAD, the government increased the import duty on the metal to 12.5 per cent from 10 per cent. Industry experts claim that businesses in the sector are shifting their manufacturing bases to neighbouring countries because of this high duty.

The Gems and Jewellery Export Promotion Council (GJEPC) has asked for a reduction in import duty to 4 per cent. Gems and jewellery exports declined 6.4 per cent to $27.9 billion in April-December this fiscal. The country’s gold imports had dipped about 3 per cent in value terms to $32.8 billion in 2018-19. The CAD narrowed to 0.9 per cent of the gross domestic product, or $6.3 billion, in July-September 2019 from 2.9 per cent, or $19 billion, in the corresponding period last year, according to data by the Reserve Bank of India.