Issue with Gold Import Figures:
- A 331% year-on-year surge in gold imports in November 2024 raised concerns about the trade deficit and the weakening of the Indian rupee against the US dollar.
- Subsequent investigation revealed a data migration error caused by the transition from the Special Economic Zone (SEZ) system to the Indian Customs Electronic Gateway (ICEGATE).
Impact of Data Errors:
- Errors led to double counting of gold imports, inflating figures by $5 billion in November 2024 and $12 billion between April and November 2024.
- Revised gold import figures for this period were brought down to $37 billion.
Reasons for Data Glitch:
- The data transmission mechanism transition began in July 2024.
- Imports into SEZs and subsequent clearances into the Domestic Tariff Area (DTA) were mistakenly counted as separate transactions.
- Technical glitches in the system continue to affect the data migration process.
Budgetary Implications:
- Gold import figures are significant for the Union Budget as they impact decisions on import duties.
- The initial inflated figures led to calls for increasing gold import duties, but the corrected data reduced the likelihood of this move.
- Any hike in duties could harm the gems and jewellery industry, a labour-intensive sector already struggling with weak demand and supply disruptions.
Economic and Industry Challenges:
- High gold duties often lead to increased gold smuggling. Around 200 tonnes of gold are smuggled into India annually, accounting for up to 25% of total gold imports.
- The gems and jewellery exports fell by 13% in November 2024 due to challenges such as weak demand in Europe and China and the Ukraine war’s impact on diamond supply.
Gold Import and Consumption:
- India imports 800–900 tonnes of gold annually, with total consumption around 1,000 tonnes.
- The corrected import data suggests imports between January and November 2024 are below the annual average of 800 tonnes.
Government’s Response:
- The Ministry of Commerce and Industry reconciled data with the Finance Ministry.
- A committee has been formed with stakeholders, including DGCIS, DG Systems (CBIC), and SEZs, to ensure consistent data publication.
- The revised trade figures for April–November 2024 are published under international data dissemination standards.
Strategic Concerns:
- High duties on gold, while aimed at controlling imports, have been ineffective in curbing smuggling and could negatively impact revenue and the domestic jewellery sector.
Migration Status:
- The migration to ICEGATE is still incomplete, and technical issues persist, necessitating further reconciliation efforts.
Takeaway for Policy:
- Accurate data is critical for sound policymaking, especially for import duties and trade deficit management.
- Strengthening data systems and avoiding technical glitches are essential to maintain economic credibility and transparency.
Also Read:Â Z-Morh Tunnel: Know All About It
Disclaimer: The information provided is for educational purposes and general awareness, particularly for UPSC aspirants.
Follow Fusion IAS
