India's gold imports surged to over 120 tonnes in August the highest so far in the fiscal, due to declining prices of gold in the global market. Gold imports stood at 89 tonnes in July 2015. In August last year imports stood at 50 tonnes. The rise in imports is mainly in anticipation of the upcoming festive season.
Gold import duty stands at 10%. Annually, India imports 1,000 tonnes of gold, making the yellow metal the highest constituent of India's import bill after crude oil.
There is a huge demand for gold in the country as it is seen as an investment option and hedge against risks. It is estimated that over 20,000 tonnes of gold are lying idle in households and other institutions in India. In order to wean people away from buying physical gold, the Cabinet last week approved twin scheme-gold monetisation and sovereign gold bonds. The main objective of the schemes is to mobilize gold held by households and temples in the country and putting the same to productive use. The schemes are likely to be operational in the next two months, closer to Diwali, when demand for gold is high.