Gold Imports in
Nov Up 23% Even as Prices Stagnate
· Volume
Inflow Estimated at 124 tonnes Compared to 99.62 tonnes in Previous Month
· Demonetisation
Demand to Convert Black Money Takes Over
· Customs
Bans Info on Consignment Wise Import and Export to Shield Gold Trade on 25 Nov
2016? Daily Trade Return (DTR) giving Port Wise Details of Import and Export
Suddenly Discontinued
-
Arun Goyal -
Gold
as a mode of investment has always been a favourite
with Indians. The yellow metal has never subsided. But the rush to buy the
precious metal when Prime Minister Narendra Modi made the demonetisation
announcement on 8 November imports of gold for November comes to 109 tonnes. And this came in a month when the government was
making a bid to flush out black money and fake currencies from the system.
“In the four hours between the Prime Minister’s
announcement and midnight on November 8, gold was selling in the informal
markets at Rs 50,000 to 55,000 per 10 grams when the
normal price is around Rs 30,000,” according to Ravi
Singh, Research Head at SMC Commodities Trade.
In fact, gold imports had contracted for eight straight
months between February and September as price rose by 12% before the fall was
arrested in October. Gold imports more than doubled to $3.5 billion on account
of high demand as against imports of $1.67 billion October of the previous
year. Price rise in the month was a marginal 4.5% over September.
India, the world’s second biggest gold consumer after
China, imported 650 tonnes in 2015-16. At this rate,
the year will end with inflow of over 1000 tonnes.
This is no covering smuggling which occupies a third of the demand.
The spurt in import during November by 23% over last
year is exceptional since International price in the month was $1238 per ounce
was marginally higher than Oct-Dec 2015 price of $1107 per ounce, according to
the World Bank Pink Sheet on Commodity Prices.
October was the sudden rise period when imports rose to
$3.50bn compared to $1.68bn in the same month last year which works out to a
jump of 108.3%. The jump in the month over September was 94.4%.
There is speculation that advance information on
forthcoming demonetisastion was leaked to certain
quarters and currency notes were converted to gold. The jewellers
in turn converted the currency to dollars for further payment of November
imports.
Investigation of the importers records should lead to
interesting findings.
Gold Imports into India
|
Month |
Import of
Gold |
|
|
|
Qty (Ton) |
Value (Bn USD) |
|
OCT-15 |
48.73 |
1.68 |
|
NOV-15 |
109.99 |
3.54 |
|
DEC-15 |
121.84 |
3.81 |
|
JAN-16 |
93.30 |
2.91 |
|
FEB-16 |
48.28 |
1.41 |
|
MAR-16 |
26.82 |
0.97 |
|
APR-16 |
31.02 |
1.24 |
|
MAY-16 |
46.57 |
1.47 |
|
JUN-16 |
39.47 |
1.21 |
|
JUL-16 |
26.48 |
1.08 |
|
AUG-16 |
25.73 |
1.12 |
|
SEP-16 |
50.50 |
1.80 |
|
OCT-16 |
99.62 |
3.50 |
|
NOV-16 |
124.16 |
4.36 |
Source: DGCI&S, ABS Estimates for Nov
2016
The
spurt in gold imports to meet demonetization demand is bound to raise concerns
of who the importers are and what they are doing with this gold. In a parallel
move, the Department of Revenue suddenly issued a notification to stop the
publication of the Daily Trade Return (DTR) from 25 November. This data
contains information on the price and quantity of import and export information
for each and every consignment moving in or out of the 106 sea ports, air ports
and land customs stations. It is an important source of information for
transparency and is a must for the free and open working of the trade. It is
also the source for anti-dumping and safeguard information to protect Indian
industry. Over a period of time, more than Rs. 1200
crore plus has been spent by the Government to provide reliable data to
industry as is being done by all advanced countries in the world including
China.
The sudden suppression of this data at the time of
demonetization has given rise to speculation that this was done to hide gold
import and export information from the public domain on what is being imported
from which country at what price.
As
things stand, gold imports into SEZs are deliberately hidden in DTR on grounds
that it is a case of “re-exports” and hence not included. The fact is that a
substantial part of gold import is in all SEZs for the ostensible purpose of
export production without the import duty or restriction of intermediate
banking channels.
In a news report, The Directorate of Revenue
Intelligence (DRI) arrested an exporter on 19 December seized more than 40 kg
of gold allegedly meant to facilitate illegal exchange of the demonetised Rs 500 and Rs 1,000 banknotes. Worth over Rs
12 crore, the gold was recovered from various places in Delhi.
The exporter operated out of the Noida Special Economic
Zone (NSEZ), from where he is alleged to have diverted gold meant for export
into the domestic market.
The NSEZ unit imported gold from Dubai for the purpose
of making jewellery and re-exporting it to the United
Arab Emirates.
The report further claims that imported gold worth over
Rs 150 crore is being diverted to the local market. DRI
officials claim to have seized fake `export’ consignments of copper with
declaration of gold from the exporter.
The
mastermind of the fraud... has been arrested and remanded in judicial custody,”
a senior DRI officer claimed.