Gold and silver imports to India, the world's second-largest consumer of the yellow metal, plunged 40% to $33.46bn in the fiscal year 2013-14 in the wake of tough government restrictions.

However, the drop in gold and silver imports narrowed in March, recording a year-on-year drop of 17.27% to $2.76bn (£1.64bn, €1.99bn), an unnamed Indian trade ministry source told Reuters.

Last month, the Reserve Bank of India (RBI) decided to allow five private sector banks to import gold, in a move that marked a major step towards easing India's tough bullion import restrictions, imposed in 2013 in order to cut the nation's trade deficit.

Government Raids

Earlier in March, Indian authorities made physical checks of gold stocks held by wholesalers, to ensure inventories tally with the amount imported through legal channels, an industry association said.

The checks were part of efforts aimed at curbing gold smuggling.

Pakistan Bans Imports

Earlier this year, Pakistan temporarily prohibited gold imports in a bid to check smuggling to neighbouring India.

Islamabad said, on 21 January, the ban would last for 30 days and that exports, mostly jewellery, would not be restricted.

Pakistan last banned gold imports for a month in August 2013 after the country purchased gold worth $514m (£313m, €380m) in the preceding month.

Indian Import Curbs

Three upward revisions to the import duties on gold in 2013, to a record 10%, and restrictions tying purchases to exports, have discouraged gold buying in Asia's third-largest economy.

While official imports in 2013 reached 750 tonnes, an additional 200 tonnes was believed to have been smuggled to india, according to estimates from the World Gold Council.

New Delhi imposed the so-called 80/20 rule in July 2013, making it mandatory to export a fifth of all gold imports.

According to that rule, only six banks and three state-run trading agencies that had facilitated export of jewellery or gold over the past three years were allowed to import. These six banks were mainly state-run lenders.