India’s gold imports in May surged fourfold from a year ago to 103 tonnes as jewellers increased purchases to replenish inventory and stock up ahead of a new national sales tax, provisional data from consultancy GFMS showed.
The rise in imports by the world’s second-biggest consumer of the precious metal will likely support global prices that are near their highest in six weeks, but could widen the South Asian country’s trade deficit. “Jewellers were aggressively buying after good sales during Akshaya Tritiya,” Sudheesh Nambiath, a senior analyst with GFMS, a division of Thomson Reuters, said.
Indians in the last week of April celebrated the annual Hindu and Jain holy festival of Akshaya Tritiya, when buying gold is considered auspicious. India had imported 25.3 tonnes gold in May 2016.
India had said it will tax gold at a rate of 3 percent under the GST, which was lower than industry expectations of around 5 percent.
The long-awaited GST is hailed as the country’s biggest tax overhaul since independence in 1947. The GST will replace a slew of federal and state levies from July 1, transforming Asia’s third-largest economy into a single economic zone with common indirect taxes.
India’s gold imports in the first five months of 2017 surged 144 percent from a year ago to 424.1 tonnes, according to provisional data from GFMS.The country’s gold imports could plunge during the traditional period of peak demand in the second half of the year, after jewellers have aggressively restocked inventory ahead of the new national sales tax.