Double counting error: Official gold import figures for Nov revised down by $5 billion

This paper reported that the transition may have resulted in gold entering Special Economic Zones (SEZs) and gold exiting SEZs being mistakenly recorded as total gold imports into the country. The discrepancy was identified only after import volumes surged sharply in November, and redflags were raised subsequently.

The transition was implemented to promote “ease of doing business” after a 2021 study by the Ministry of Commerce and Industry revealed that certain SEZ units had raised concerns about “transaction charges” on the SEZ online platform that were not applicable to the Domestic Tariff Area (DTA) for similar transactions on ICEGATE.

A query sent to the Ministry of Commerce and Industry seeking answers to the reason for the data revision went unanswered.

While the revision made on Wednesday has lowered the reported year-on-year growth in gold imports for November from 331.4 per cent to 186.2 per cent, gold imports remain at elevated levels due to a surge in buying during the festive season.

“India’s trade data is closely monitored by investors, policymakers, and international agencies to assess the health of the economy. Frequent or unexplained revisions can damage the credibility of India’s economic reporting, leading to uncertainty in financial markets and eroding confidence in government institutions,” the think tank Global Trade Research Initiative (GTRI) said. GTRI said that in the interest of transparency, the government must clearly explain the rationale behind the revision.

“Was there an error in the initial data compilation, or did the DGCI&S uncover discrepancies after further verification? Without a clear explanation, such revisions erode trust in official statistics, especially when no changes were made to the data compilation rules in November,” GTRI said.

This also raises a critical question: if there was a significant error in gold import data, could similar discrepancies exist in other commodity figures or for other time periods? The government must proactively review trade data to ensure this is an isolated case and not indicative of a broader issue with data accuracy, GTRI added. India is the world’s second-largest consumer of gold and relies on imports to meet most of its demand, which typically increases during the festival and wedding season in the December quarter.

Economists have noted that demand for gold as an asset class is higher compared to recent years, with returns of nearly 30 per cent this year. Central banks worldwide are also engaging in a gold-buying spree.

Vipul Shah, chairman, Gem and Jewellery Export Promotion Council (GJEPC) said that the amended data on gold imports from January to November 2024 is well below the annual average of 800 tonnes.

“This is encouraging as the reduction of import duty on gold has seen a substantial shift of imports from the grey market to official channels. The export of gold jewellery is expected to cross the $12 billion mark in 2025, showing robust growth in very trying times,” Shah said.

India imports gold from countries including African nations, Peru, Switzerland, and the United Arab Emirates. Gold imports rose sharply after India cut import duties on gold from 15 per cent to 6 per cent in July.

Higher November imports had raised concerns within the bullion industry about potential import duty hikes to curb consumption.

However, revised data shows no unusual rise in demand, a Mumbai-based dealer with a gold-importing bank told Reuters.