Gold imports into India soared 176% in August compared to last year as a result of the government’s decision to loosen import restrictions, however, the draconian 10% gold import remains in place.

Last year gold imports into India fell dramatically following the previous government’s decision to raise the gold import tax from 1% to 10%. The purpose of the tax was to reduce the country’s current account deficit and protect the value of the rupee. Prior to the introduction of the gold import duties India was the world’s largest consumer of gold.

As a result of gold imports surging from $739 million to £2 billion the Indian current account deficit has widened $10.8 billion. Many believe the gold import tax will remain as long the current account deficit remains a problem for the Indian economy.

Despite many of the restrictions remaining the recent import figures suggest the Indian love affair with gold is set to continue. Gold is central to Indian culture and is often given as a gift at weddings, birthdays and religious festivals.