As demand for gold got a boost from local jewellers and retail investors on account of cut in import taxes as well as sharp correction in gold prices, March gold imports in the country have logged a 471 percent surge YoY to a huge 160 tonnes.
And the high level of imports from the second highest consumer of gold in the world could also lent support to gold prices, which have weakened almost 17 percent from the record high of $2072 hit in August 2020.
Also, this increase in imports of gold could weigh on the rupee negatively as trade deficit shall rise.
In the March quarter the country imported record 321 tonnes, up from 124 tonnes in the year ago period.
Value-wise March imports of gold zoomed to $8.4 billion in comparison to $1.23 billion in March 2020.
In February, to reduce smuggling into the country and provide a fillip to retail demand for gold, the centre slashed import duty on gold to 10.75% from 12.5%.
"Many consumers had postponed buying due to higher prices. They rushed to buy after prices corrected sharply," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the city of Kolkata.
In March, gold futures touched a one-year low price of Rs. 43,320 per 10 gms.