Indians are easily the world's most voracious buyers of gold so as prices fall, demand should rise, right? Conversely, as prices rise, demand should fall, right? Wrong. Experience of the past few years suggests that Indians buy gold with an apparent disregard for price. Imports of gold and silver have grown by 30% in volume in the five years up to 2012. They now rank in value second only to petroleum and amount to about US$ 50 bn annually. Gold and silver imports during April, 2013 jumped by 138% YoY. For the month of May the country imported 162 tonnes. That is a headache for policy makers because gold imports have a big impact on India's current account deficit. As a result the government is planning to introduce more steps to curb gold imports. This may include banning sale of gold by banks. They may also review export import policy on gold. Last month, the RBI had imposed curbs on import of the yellow metal by banks. Besides, it has also put restrictions on banks and NBFCs for providing loans against gold coins as well as units of gold ETFs. We do not think curbing gold imports is the most ideal solution to the current account deficit problem. The government should instead focus on making India's exports more competitive.