Kirtika Suneja

India's gold imports surged to a record $14.9 billion in November 2024, surpassing crude oil. Free trade agreements, like the one with the UAE, are blamed for fueling this increase through duty-free gold imports. A think tank recommends excluding precious metals from future FTAs to protect India's trade balance and forex reserves.

The Comptroller and Auditor General (CAG) has criticized the ineffectiveness of the Denied Entity List (DEL) mechanism under the Export Promotion Capital Goods (EPCG) scheme. The CAG highlighted the lack of verification of submitted documents and the issuance of authorizations without ensuring compliance with previous obligations.

India's import data since July is under scrutiny due to a potential miscalculation in gold imports. A transition in data portals may have led to errors, prompting a government investigation. November's gold imports were initially reported at a record high, impacting the trade deficit. Officials are examining whether gold movements within special economic zones were double-counted.

Synopsis India's import data since July may have to be recast as the ministries of finance and commerce & industry look into the sudden spike recorded in imports of gold. Officials from both ministries will hold discussions this week and next to examine the issue. India's import data since July may have to be recast as the ministries of finance and commerce & industry look into the sudden spike recorded in imports of gold. Officials from both ministries will hold discussions this week and next to examine the issue. Transmission of data from the special economic zone (SEZ) portal to the Indian Customs Electronic Gateway (Icegate) may have led to calculation errors in the case of gold. Officials ruled out a similar issue with any other commodity. “SEZ Online was merged with Icegate in July,” an official said. “We will examine the import data since then, and it could be recast.” Another official said, “We are checking if there are errors related to this transition. Sometimes, there are flaws when we shift to a new system. So, all imports (numbers) will be checked if that is the case.” A similar issue had surfaced in 2011, when over-reporting of export data on account of mis-classification, as well as double counting due to problems in the computer software, had led to the recast of systems at the erstwhile DGCEI. The Directorate General of Central Excise Intelligence is now the Directorate General of GST Intelligence (DGGI). India's exports rose 2.17% to $284.31 billion, and imports by 8.35% to $486.73 billion, during April-November, according to data released on December 16. The trade deficit widened to $202.42 billion, from $170.98 billion in the year-ago period. Another official said it was likely gold imports to SEZ warehouses and movement to the domestic tariff area had been double-counted. Any product entering India's territory through filing of bills of entry at Customs is counted as an import. Any movement of gold within the country for use in SEZs, export-oriented units (EOUs), or the Gujarat International Finance Tec-City (GIFT City) for subsequent domestic sales should not figure in total import calculations. Separate data on gold imports by free trade warehouses at GIFT City have been shared with the Directorate General of Commercial Intelligence and Statistics (DGCIS) since May 2023 and it needs to be seen how errors may have crept in. The commerce and industry ministry on Wednesday ordered a probe into the data. Official data released on December 16 had showed that gold imports in November touched an all-time high of $14.8 billion, widening the trade deficit to a record $37.84 billion. Imports increased 27% year-on-year to a record $69.95 billion, while exports contracted 4.85% to $32.11 billion. The commerce and industry ministry releases trade data every month that doesn't include gold imported by the Reserve Bank of India. This gets included in the capital account. The industry said the rise in value doesn't imply a rise in volumes. “It's pertinent to understand that the increase in value doesn't necessarily translate to a significant rise in physical volumes,” said Vipul Shah, chairman of the Gem and Jewellery Export Promotion Council (GJEPC). In FY24, India imported 795.25 tonnes of gold valued at $45.54 billion, while in the current fiscal year, it imported 658.21 tonnes in April-November, valued at $49 billion. “The rise in value terms can best be attributed to the nearly 30% rise in the gold price and also the decline in the gold price in November after Donald Trump's election,” he said. India's annual gold imports have historically fluctuated between 650 and 1,000 tonnes on-year for the last 10 years, and the current trend of April-November 2024 aligns with this pattern. Shah said India's gold imports do not appear headed toward 1,000 tonnes. Imports of petroleum, crude and products rose 7.88% in November to $16.11 billion, while in the first eight months of the fiscal, they were $123.26 billion, up 7.15% from the year earlier. Domestic petroleum, oil and lubricants consumption accounts for about 73.6% of total local production and imports of crude oil and petroleum products make up the rest.

India probes surging steel imports. Domestic steel makers allege harm from the import rise. The government might impose a 20% safeguard duty. The probe covers various steel products. It excludes certain specialized steel types. The investigation will analyze import data from recent years. A decision on duties is expected soon.

Indian garment, handicraft, and engineering exporters anticipate 5-10% gains from the rupee's decline. However, import-dependent sectors like gems, jewelry, and electronics face rising input costs, offsetting potential benefits. Further, sharper depreciations of other currencies may pressure Indian exporters to lower prices, limiting long-term competitive advantages.

India prepares for trade talks with the returning Trump administration. The government consults with industry to identify key export priorities. Potential tariffs and the mini-trade deal are under consideration. India also explores strategies like IT export diversification and domestic manufacturing growth. The Indo-Pacific Economic Framework trade pillar remains a point of contention.

India might remove customs duty exemptions on certain imported components such as insulins, rough lab grown diamonds, and materials for LED and LCD TV panels in the upcoming budget. This is to encourage local manufacturing. The finance ministry is seeking inputs and reviewing the planned investments and domestic production capacities for 31 products.

India's solar photovoltaic (PV) exports increased to $1.83 billion in 2023, up from $200.8 million in 2013, making it the sixth-largest exporter globally. In April-October FY25, India exported $711.95 million worth of PV cells, mostly to the US, driven by global demand and supportive policies.

Startups have generated over 1.6 million jobs across India, with the DPIIT recognising 1.57 lakh startups by December 25. The country boasts more than 73,000 startups with at least one woman director. India's vibrant ecosystem, driven by affordable internet and a young workforce, has produced over 100 unicorns and influenced global innovation.