NEW DELHI (Reuters) - India imported around 162 tonnes of gold in May, a finance ministry spokesman said on Monday, much more than expected and making further measures from the government to curb demand in the world’s biggest bullion buyer almost certain.
The figure is sharply higher than April, even though it is below an estimate of 262 tonnes earlier in the day from Finance Minister P. Chidambaram which had stunned experts, including the World Gold Council and the Bombay Bullion Association.
“The correct figure for May gold import is around 162 tonnes, and not 262 tonnes,” D.S. Malik, spokesman of the ministry of finance, told Reuters.
Indians have continued a buying spree that started in April, as consumers took advantage of a slide in global prices which coincided with regional festivals when gold is bought for gifts.
April’s imports were 142.5 tonnes, according to an official in the customs department at the ministry of finance, who handles gold data. In value terms, April imports shot up 138 percent from a year earlier to $7.5 billion, including small amounts of silver.
With May imports soaring even higher, the government is under pressure to look at more measures to rein them in. Such hefty imports threaten to widen a current account gap which already hit a record 6.7 percent of GDP in the December quarter.
“Necessarily, we will have to check (gold imports),” Chidambaram said, after quoting the incorrect import figure.
India hiked gold import duty by half to 6 percent in January and the central bank has also stepped in to restrict purchases. The measures helped reduce first quarter imports to 215 tonnes from 228 tonnes a year earlier, according to figures from the World Gold Council.
But since then, domestic prices have dropped sharply, tracking global trends, and undermined further by a stronger rupee. Gold futures on Mumbai’s Multi Commodity Exchange hit a year low of 25,720 rupees per 10 grams on April 16.
They were trading around 27,110 rupees on Monday - roughly equivalent to $1,351 per ounce - as global spot gold prices were quoted around $1,403 per ounce.
The government is cautious about raising import duty further because it is concerned that this could encourage smuggling.
Chidambaram said on Monday the Reserve Bank of India could consider banning all purchases by jewellers on a deposit basis with full payment on delivery. On May 13, the central bank banned such purchases from banks.
The WGC forecasts imports of about 615 tonnes in the first half of 2013 - implying June imports would have to retreat to more normal levels of about 80 tonnes. It expects second half demand to match 2012’s 485 tonnes - putting it on track for a record year.
But some in the industry remain sceptical that Indian consumers will have bought so much in May.
“After Akshaya Tritiya (festival on May 13), demand was not there. Across India consumers were not into the market as there was a lot of volatility,” said Haresh Soni, chairman of All India Gems and Jewellery Trade Federation.
“From the market point of view, we are not expecting May figures should be more than April,” he added.
Additional reporting by Siddesh Mayenkar in MUMBAI; Writing by Jo Winterbottom; Editing by Anthony Barker and William Hardy