Gold Imports in India During the Festive Season

Gold holds a significant religious and financial value, making India one of the world's largest gold consumers. It plays a vital role in Indian traditions and is especially sought-after during festivals like Diwali and Dhanteras, where buying gold is considered auspicious. It symbolizes wealth and good fortune, prompting families to purchase gold jewellery, coins, and bars as gifts, ensuring both celebration and financial stability.

This heightened demand for these precious metals boosts the import of raw materials from countries such as the UAE, Switzerland, Peru, South Africa, and others.

In the Budget 2024 Finance Minister Nirmala Sitharaman introduced the new customs duty on gold was reduced from 15% to 6%—the lowest rate observed since June 2013. Furthermore, the customs duty on gold doré, an alloy of gold that is often used in the production of jewellery and other gold products, was lowered from 14.35% to 5.35%.

These cuts in duty structures have undoubtedly contributed to the surge in imports. The festive season has boosted demand for gold in jewellery, coins, and investments, increasing consumer interest. This combination of favourable import conditions and seasonal demand will likely enhance India's gold market dynamics.

According to the beDATOS, the UAE is the largest supplier of gold to India during this period, accounting for 30.7% of imports. It is followed by Switzerland at 22.5%, Peru at 9.1%, and other major suppliers.

The UAE and India signed the Comprehensive Economic Partnership Agreement (CEPA), a free trade agreement (FTA) that took effect on May 1, 2022. This has resulted in significant trade growth this year between the two countries, as gold is one of the most imported items from the UAE and the most imported item for this period.

Asia, being the key hub for gold supply to India, contributed almost 36% of the nation's total gold intake. The other players in the Asian market include China, Saudi Arabia, etc. The UAE is a key player in this market, accounting for 86% of total exports to India during the festive season.

During that period, over 23% of imports originated from Europe, with Switzerland being the primary contributor. The sole major player in the European market is responsible for 97% of the gold supply from Europe. Peru covered, 61% of imports originating from South/Latin America.

The festive season in India is a time of joy, celebration, and, of course, gold. The surge in gold imports during this period is a testament to the enduring allure of this precious metal. As India continues to shine in its festive glory, gold remains at the heart of its celebrations, symbolizing prosperity, tradition, and timeless beauty.