Gold import bill likely to fall by 10% on account of jewellers' strike

Edible oil imports rising but moderate prices help keep import bill under check in FY2016

Tepid imports in the last two months of the financial year are likely to help government save foreign exchange as the gold import bill for FY2015-16 is now estimated at $31.2 billion, or almost 10% lower compared to the previous fiscal. The January import bill for gold was $29.4 bn, while February imports of the yellow metal are estimated at 30 tonnes, or $1.1 billion. March, however, has begun with marginal volumes. So far, only 5 tonnes, or $170 million, have been imported and the month is likely to end with 15-20 tonnes worth about $500 million, thanks to an ongoing jewellers strike to protest excise duty.

 

February imports, estimated at around 30 tonnes, was due to steep discount ($30-$50 per ounce) prevailing in Indian market in gold due to high prices and low demand, while in March half of the month has been lost due to the ongoing strike. Only factories working for exports or gold refineries who are getting supplies of dore, or unrefined gold, are importing.

“FY2015-16 average price is likely to end l ower by approximately 8% from 2014-15. Additionally this year volumes above 60 tonnes a month was primarily during months when prices were lower,” said Sudheesh Nambiath, lead analyst (Precious Metals Demand, GFMS) at Thomson Reuters.

However, imports of edible oil have been rising this fiscal; the import bill has been more than $10 billion for the past two years. The bill for FY2015-16 is flat but is expected to jump 10-20% in FY in 2016-17.

The FY16 import bill till January has been $8.874 bn and is expected to cross $11 bn this financial year, an all-time high. in FY15, India imported $10.6 bn. In FY16, volumes have been much higher but prices have remained low which has kept bill under control in line with gold. That is likely to change next fiscal as volumes are expected to rise, as are prices. 

“Import bill depends on tonnage and prices. The import bill for FY 16-17 will be much higher than 15-16 because tonnage will be higher by almost 1 million tonnes and prices will be 10 to 15 percent higher,” said Dorab Mistry, director at Godrej International. “The Indian government is still dilly dallying on GM oilseeds while our problems are escalating.”