The government has scaled down its estimate of gold imports for November 2024 to $9.84 billion from the preliminary estimate of $14.86 billion announced last month, data compiled by the Commerce Ministry’s Directorate General of Commercial Intelligence and Statistics showed on Wednesday.

The $5 billion downward revision in gold imports would lead to an equivalent reduction in the country’s trade deficit which would strengthen the macroeconomic fundamentals and be positive for the rupee, a senior official said.

The revised figures for inbound shipments of gold in value terms are nearly 34 per cent lower than what was reported last month.

According to sources, the high figure announced earlier was due to a double-counting error in the estimate of gold imports kept in warehouses by custodians after a change in methodology. The imports kept by custodians in free trade zone warehouses were added to that reported by domestic banks which buy the gold from the custodians and this ended up in the same consignments getting counted twice leading to the inflated estimate.

While gold imports have been on the rise after the duty cut announced during the Union Budget in July 2024, the huge surge in shipments during November had puzzled market analysts. The import of gold was shown to have risen over four times compared to the corresponding figure of $3.4 billion for the same month of the previous year which was considered improbable.

This resulted in India’s trade deficit being reported at an all-time high of $37.8 billion reflecting a weak external balance position, which adversely impacted the rupee as well.

India is the world's second-largest consumer of gold next only to China and relies mainly on imports to this demand, especially during the festive and wedding seasons when it is gifted in large quantities to brides and bridegrooms.