These imports stood at Rs 1,121 crore ($267 million) against Rs 2,026 crore ($530 million) during the above period, according to the latest provisional estimates available with the commerce ministry.

Commerce ministry sources attributed the steep fall to the hike in customs duty on gold from Rs 250 to Rs 400 per 10 gms. Gold imports constitute the second highest quantum of commodity imports in the country after crude and petroleum products.

Yet another reason is the gold selloff by major banks in London and Germany increasing the availability of the metal in the world market, sources say.

During 1998-99, gold and silver imports are estimated at Rs 20,500 crore, up by 70 per cent from the previous year's Rs 11,789 crore.

The move to increase the customs duty on gold was aimed at reducing importsand preventing smuggling.

Sources, however, say that the government has no knowledge of the extent of gold coming into the country through unofficial channels.

The hike in the import duty on gold has not affected MMTC's gold import business, though it has brought about intense competition from other agencies nominated by the government.

Of the 13 agencies, nine consist of banks -- six Indian and four foreign banks -- and four public enterprises, including MMTC.

The other enterprises are State Trading Corporation, Handicrafts and Handloom Export Corporation and Projects and Equipment Corporation, the last one being a new entrant in the gold import area.

Sources say that MMTC's gold import operations have been proceeding satisfactorily and with the large demand there is no threat to its business.

In fact, "our gold imports in the 1998-99 fiscal have already crossed the 50-tonne-mark valued at about Rs 2,000 crore", sources said and added that gold loan scheme operated by MMTC guaranteed fullsecurity to customers with internationally competitive rates of interest.

Starting with a modest level of 50 kg in 1988-99, MMTC's gold imports have touched 27 tonnes in 1995-96 and 35 tonnes in 1996-97, making it emerge as the largest bullion trader.

The supplies to exporters are on a replenishment and loan basis, while those in the domestic market are against the special import licence scheme.

The business earned a profit of Rs 72.38 crore in the past three years ending 1995-96 against exports of gold and jewellery valued at Rs 3,778 crore.

MMTC operates gold vaults at Delhi, Mumbai, Bangalore, Hyderabad, Ahmedabad, Ahmedabad, Jaipur, Vizag and Calcutta to meet the requirements of customers.