Gold imports by India, the world’s largest buyer, fell for the first time in three quarters as jewellers and bullion suppliers relied on inventories to meet an increase in demand, the World Gold Council has said.

Inbound shipments declined by 5.7% to 215 t in the three months ended March 31 from 228 t a year earlier, the London-based producer group said in a report released last week. Total demand climbed 27% to 256.5 t, with consumption of jewellery advancing by 15% to 159.5 t and sales of coins and bars gaining 52% to 97 t, the council said.

Demand may have further surged in India after the precious metal entered a bear market last month, prompting the central bank to curb imports by banks on a consignment basis to contain a record current account deficit. Bullion plummeted by 14% in two sessions through April 15 in the worst slide since 1983. That may lift Indian imports to more than 100 t for a second month in May, according to MMTC-PAMP India, a refiner based in the Asian country.

“The Indian market was well prepared and stock building during the fourth quarter ensured decent levels of trade inventories heading into the first quarter,” the council said. “These stocks were depleted, following the tax rise in late January as demand gathered pace, with investors making the most of the decline in the local gold price in February.”

Imports surged by 62% to 255 t in the three months to December 31 on speculation that the Indian government might increase tax on overseas purchases and weddings and festivals boosted demand, according to the council’s data.

Rural Households

Total consumer demand in China jumped by 20% to 294.3 t, beating Indian consumption, the council said. Indian demand in the first quarter of this year was driven by rural households, whose incomes benefited from a good harvest, the council said.

“A 4% decline in the local gold price over the course of the quarter was well timed to motivate jewellery purchases in preparation for the April wedding season,” the council said.

The precious metal has lost a further 10.5% this quarter on the Multi Commodity Exchange of India, extending declines to 15% this year. Futures tumbled to 25 270 rupees (about $462) per 10 g on April 16, the cheapest since September 2011.

Imports may climb to 900 t this year from 860 t in 2012 because of the decline in prices, Bachhraj Bamalwa, a director at the All India Gems & Jewellers Trade Federation, told Bloomberg News last week.