Gold imports declined over 74 per cent to $1.75 billion in April due to restrictions imposed by the government on inbound shipments of the precious metal to narrow the current account deficit.
Imports of gold in April 2013 stood at $6.78 billion.
In March, the imports of the precious metals were down by 17.27 per cent to $2.75 billion from $3.33 billion in the same month previous year.
Lower imports helped to narrow the trade deficit to $10 billion in the first month of the current fiscal (2014-15).
India’s current account deficit (CAD), which is the excess of foreign exchange outflows over inflows, touched a historic high of 4.8 per cent of GDP in 2012-13, mainly due to rising imports of petroleum products and gold.
A high CAD puts pressure on the rupee, which in turn makes imports expensive and fuels inflation.
Finance Minister P. Chidambaram recently said the CAD was brought down significantly to $32 billion in 2013-14 as against $88 billion during 2012-13.
The CAD in 2012-13 was at 4.7 per cent of GDP and in 2013-14 it will be only 1.7 per cent, the Finance Minister had said.
The government had increased customs duty on gold to 10 per cent and banned import of gold coins and medallions, while the RBI linked imports of the metal to exports.
India is the largest importer of gold, which is mainly utilised to meet the demand of the jewellery industry.
The Commerce and Industry Ministry is pitching for easing of the gold import restrictions to boost gems and jewellery exports, which declined by eight per cent in April to $3.27 billion.