Gold imports to India's diamond nerve centre dive 90% in June

Gujarat appears to have shown the lead. The nerve centre for the bustling diamond industry in India has ensured that they tie-in with the Indian government's demand to cut down on gold imports.

Import figures of the Ahmedabad air cargo complex for the month of June has revealed a drastic slump in gold imports. Precious metal imports in Gujarat has nosedived from its two year high of 37.61 tonnes in May to just 3.73 tonnes in June.

That translates into a 90% month on month fall.

With early rains in June, and not many weddings to buoy demand, imports of the precious metal have skidded in other parts of the country too. Retailers insist that  customers are expecting a further correction in the price of gold and are hesitant to buy at this time.

Though there is a certain class, which usually invests in gold when the price crashes, ``they are now awaiting the right time to make their purchase, despite the near 7% correction in gold prices during June,'' said Manish Choksi, bullion retailer. He added that the low demand for gold was expected to continue for two more months.

Retailers say that India's gold imports in June are estimated to have slid by 40 tonnes, less than a quarter of the country's purchases in May. Small jewellers are having to bear the brunt, they add.

Mukesh Kothari, director at Riddisiddhi Bullions, which is considering curtailing sales of gold coins and bars in order to check investment demand for gold, said imports have come down drastically in June.

Harmesh Arora, director, Bombay Bullion Association said imports in July are not expected to pick up.

Bachhraj Bamalwa, director of bullion house Nemichand Bamalwa said it is becoming increasingly difficult to get supplies. ``Most banks have stopped importing gold which has created a supply shortage in the Indian market. Bullion dealers are offloading gold that they stocked during April and May at a high premium, which is not helping the small jewellers and retailers spread across the country,'' he said.

In a bid to contain India's record current account deficit, the government had banned consignment imports, making it difficult for smaller jewellers with lower working capital, to source supplies.

Retailers said most of the supplies in the Indian market are now being met by privately held trading houses and state run agencies such as MMTC, State Trading Corporation and PEC.

Bamalwa said that if the situation does not improve in the next fortnight, the survival of a large number of unorganised players would be at stake.