Gold import in India plummeted sharply during December 2008 due to falling demand in the domestic as well as international market with the onset of economic slowdown.
Bombay Bullion Association (BBA) said that the gold import in India declined significantly in the month of December 2008 due to sluggish demand, as reported by REUTERS.
BBA further said that India imported three metric tons of gold in December 2008. The import in 2007 was clocked in at 759 Tonnes, whereas it dropped to 402 Tonnes in 2008. According to Gems and Jewellery Export Promotion Council (GJEPC), gold jewelry exports from DTA (Domestic Tariff Area) between April and September 2008 stood at $1.02 Billion, 17% down from $1.25 Billion in the same period previous year.
In view of a significant decline in gold and jewelry business in the country, the Indian government is drafting a plan to make gold import regulations more flexible so that more agencies can import the yellow metal. Moreover, economic meltdown - which has engulfed most parts of the world – is showing its effect on the world’s largest consumer economy too (India), extending to the jewelry market.
Under the current scenario, people are again going to basics and are controlling their spending. Gold was the only asset that showed impressive performance in 2008. However, with the arrival of festive season and price corrections, gold prices started to fluctuate, taking the market out of control (in demand terms). Furthermore, over the last six months, people have stopped purchasing the yellow metal in the expectation that prices will see correction in future.
It is believed that existing regulations as well as involvement of limited number of banks and institutions in import of gold have badly hit the Indian gold jewelry exports, particularly during economic meltdown. In fact, India’s supermarket of gold jewelry and diamond, Surat (Gujarat), is suffering from heavy losses in trade on account of the economic meltdown.
According to a Research Analyst at RNCOS, “With weak demand due to economic downturn, gold import in India tumbled sharply during December 2008. However, gold is traditionally viewed as the safest asset for long-term investment to make profits, especially during crisis. Thus, the Indian gold market will rely on market conditions in future.”
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