Industry bodies have approached the government to probe the surge in gold imports in November as they suspect an error may have crept into the data calculation as the figures are much higher than expected, sources said.
“The government is investigating the matter and checking the data to see if there has been double counting, but there are no clear indications yet as to where things might have gone wrong,” an official said. business line.
When contacted, Sachin Jain, CEO for India, World Gold Council, said, “Based on the recent November data, we don’t think the official figure should be that high, taking into account what is happening on the ground. We have to wait until the actual number becomes known and the government provides clarity about this. In the meantime, the industry has written to the Ministry of Commerce to investigate and verify that number.”
Increase in demand
In November, demand for the precious metal rose due to continued festival buying and a decline in gold prices after a surge during Dhan Teras and Diwali. Moreover, gold is seen as a safe haven for investors, especially as the geopolitical crisis situation continues to spread around the world, and has delivered high returns through 2024, some economists note.
Madan Sabnavis, chief economist of Bank of Baroda, said: “We should not look at one month (November). Cumulative for April-November is always better to look at. In my opinion, demand for this asset class (gold) has increased as it has delivered good returns (28 percent) this year. If you go back to 2023, 2022 and 2021, we didn’t get the same kind of returns. So there would be a real rush.”
SGB problem
The fact is that there is a higher demand for gold as November is also the wedding season. Second, gold has developed into an investment vehicle. As long as the government and the RBI provided government gold bonds (SGBs), people did not go for physical gold, he said.
“With no new SGBs being issued, this could be a factor in the increase in demand for physical gold. Whether or not these factors justify the increase from $4 billion in November 2023 to $14 billion in November 2024, the fact is that demand has increased,” Sabnavis said.
Gold imports skyrocketed to a record $14.8 billion in November 2024, up more than 300 percent from $3.44 billion in November 2023, according to data shared by the Commerce Department. However, government data does not match industry figures.
“There is a chance of double counting in SEZ. We believe the actual amount of gold imported into India in November could be lower than what has been reported. We believe that when gold entered the SEZ, it was reported. When the same gold disappeared from the SEZ, it was reported,” said Chirag Sheth, South Asia chief consultant at Metals Focus, a global precious metals consultancy and research firm. Metals Focus also happens to be the official data provider of the World Gold Council.
Unusual use
While Commerce Ministry data put gold imports at 173 tonnes in November, the industry estimated imports during the month at 130-140 tonnes.
“On noticing an unusual increase, the DGCIS (under the Ministry of Commerce) has taken up a detailed investigation into the gold import data and reconciliation would be done with the data received by CBIC (Central Board of Indirect Taxes and Customs) ,” said another source.
India’s trade data is well organized and maintained electronically through systems such as ICES and ICEGATE, under the supervision of DGCI&S, said Ajay Srivastava, former Indian Trade Services official. These platforms ensure accuracy, reducing the chance of errors or double counting.
“Any product, including gold, which enters the Indian territory through submission of a bill of lading to customs is an import into the country. This means that any subsequent domestic movements of gold within the country for use in SEZs, EOUs or Gift City, or subsequent domestic sales, are not imports and should not be included in total import calculations. DGCI&S and CBIC can check if there is any deviation from this practice,” he said.
Amid concerns over high gold imports in November, the government must address data integrity rumors to maintain public confidence, Srivastava added.
