Double counting: $3-4 bn downward revision in Nov gold import figures likely
Tue Dec 24 2024
AN UNUSUAL jump in gold imports in November (180 tonnes in volume, i.e., three times the average in the first 10 months, $14.3 billion compared with $4.3 billion in the first 10 months) is partly being explained by the double counting of gold — as it enters Special Economic Zones (SEZs) and then again as it exits the SEZs.
This data discrepancy is due to the shift in the e-filing services for gold traders to the Indian Customs Electronic Gateway (ICEGATE) platform from National Securities Depository Limited (NSDL) since July 1, according to sources.
The sources said the discrepancy, being addressed through a reconciliation of data between the Directorate General of Commercial Intelligence and Statistics (DGCIS) under the Commerce Ministry and the Central Board of Indirect Taxes & Customs (CBIC) under the Finance Ministry, is estimated to have added between $3 billion and $4 billion to the November gold imports.
“SEZ data used to come from NSDL, but ever since ICEGATE came into use in July, some confusion has arisen. This issue has occurred only in the last 7–8 months. The revision is likely to be in single-digit billions—in the $3–4 billion range. While all data is being checked, the issue is specific to gold and relates to how shipping bills are marked. There will be clarity in a few days after the reconciliation is completed,” the source said.
However, the likely single-digit revision may not significantly impact November’s trade deficit, which had hit an all-time high of $38 billion.
The April-November trade deficit stood at $127 billion. The jump in total imports was primarily driven by higher gold imports, Nomura said, but noted that the sharp rise (to 180 tonnes) in November “cannot be explained by festive demand alone”. The surge “calls for revisiting the reduction in customs duty” on gold announced in July and highlighted that “the widening trade deficit calls into question the RBI’s foreign exchange intervention strategy”.
In the Budget 2024-25, the customs duty on gold was sharply cut to 6 per cent from 15 per cent. Gold imports between April and November this year surged 43 per cent to $49.08 billion compared to $32.92 billion during the same period last year. Economists said demand for gold as an asset class is higher compared to recent years, with returns of nearly 30 per cent this year. Central banks across the globe are also on a gold buying spree.
Explaining the ‘double counting’, think tank GTRI said any product, including gold, entering India’s territory through the filing of a Bill of Entry at Customs is considered an import and this means that subsequent movement 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.
“The DGCIS and CBIC should check for any deviations from this practice,” it said.
Source: https://indianexpress.com/