Import of silver into Gujarat, a major jewellery market, has nosedived by 86% in August 2014, a year after the then Congress-led United Progressive Alliance (UPA) government hiked the import duty on the white metal to 10%.
The duty has been retained since then even by the new regime at the Centre despite clamour from the gems and jewellery industry to reduce import duty.
“Import of silver into Gujarat in August 2014 stood at 7.98 metric tonnes (MTs), down by 86.41%. In August 2013, 58.76 MTs of silver was imported into Gujarat,” the data shared by the Gujarat State Export Corporation (GSEC) suggests.
The import numbers for silver into Gujarat for August 2014 is the lowest for the last five years, the data suggests. In August 2010, 54.82 MTs of silver was imported into Gujarat while, the import of white metal in August 2011 stood at 26.78 MT. August 2012 saw import of 35.01 MTs of silver into the state.
Import of silver into the state in preceding months of June 2014 and July 2014 was also comparatively low. The two months respectively saw silver worth 3.78 MTs and 6.87 MTs being imported. In corresponding months of 2013, 112.20 MTs and 274.92 MTs of silver was imported into the state.
Nationally, India imported silver worth Rs 53.06 crores from April-July 2014, much less than the Rs 98.94 crores silver imported between April and July 2013, according to the numbers posted on the website of Gem and Jewellery Export Promotion Council (GJEPC), the country’s apex body of the gem and jewellery industry.
Commenting on the reduction of import of silver into Gujarat, Samir Mankad, managing director, GSEC, said, “Silver is an unreliable commodity, which is always subject to speculations. The current data of silver import into Gujarat seem to suggest that traders have excess physical inventory of the white metal with them, resulting in reduced import of silver and emphasis on clearance of inventory.”
All India Gems & Jewellery Trade Federation (AIGJTF) chairman Haresh Soni attributed the reduction in import of silver in Gujarat and across the country to the high import duty imposed on the white metal.
“Because of high import duty imposed on silver, the overall buying sentiment among traders and investors is not good. Consumption environment, at present, is not active and restrictions are not helping revive the investor sentiment,” added Soni.
Import duty imposed on gold, silver and platinum, in August 2013, was aimed at arresting the yellow and white metal’s imports, mainly responsible for spurt in Current Account Deficit (CAD), which had touched a record high of 4.8% of the country’s Gross Domestic Product (GDP) in 2012-13.
CAD, the difference between the inflow and outflow of foreign currency, narrowed sharply to $ 7.8 billion, or 1.7% of GDP, in the first quarter of fiscal year 2014-15.
Soni said that with India’s CAD coming down to 1.7% of GDP mainly on account of reduction in trade deficit and a steep decline in gold imports, the government must reduce the import duty as consumption will not increase immediately and sentiments will take time to revive.
“Now that crude oil prices have also come down and dollar showing signs of being stable, the Centre must gradually bring down the import duty on gold, silver and platinum to check smuggling, which has also multiplied,” Soni said.
India imported 845 tonnes of gold valued at over Rs 2.45 lakh crore in 2012-13. The quantity of silver imported during 2012-13 was 1,963 tonnes valued at Rs 10,691 crore. India is the largest importer of gold, which is the largest imported item into the country after petroleum.