Kotak Cuts Gold Import Forecast Amid Sharp Monthly Decline

Kotak Institutional Equities has expressed concern about its forecast for India's gold imports in FY27 due to a sharp decline in official monthly imports. The firm initially estimated that India would import $88 billion worth of gold in FY27, but recent trends suggest this figure may be too high.

The first five months of FY27 saw gold imports totaling $17.5 billion, down from $16.9 billion in the same period last year. Kotak attributed the decline to a 15% increase in gold import duty on May 13, which made domestic gold prices more expensive relative to global prices.

The higher duty may have deterred household purchases of gold, but Kotak also suggested that buyers might be waiting for a possible duty cut. Additionally, the firm flagged the possibility that some gold imports are being diverted to unofficial channels, which could result in lost customs and goods and services tax revenue for the government.

Kotak emphasized that a change in the taxation structure could help reduce gold imports, encourage households to recycle existing gold, and protect government revenue. The firm has long advocated for higher GST rates and lower import duties on gold as an alternative route to achieving these goals.