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MUMBAI - India's gold imports in July more than doubled from a year earlier to their highest level in three months as demand improved after states lifted lockdown restrictions, allowing retail consumers to make purchases for weddings, a government source said.

Higher imports by the world's second-biggest bullion consumer could support benchmark gold prices, which have corrected nearly 13% from an all-time high of $2,072 in August 2020.

The surge in imports could increase India's trade deficit and pressure the rupee.

India imported 74 tonnes of gold in July, compared to 32 tonnes a year earlier, the government source said on Thursday, requesting to remain anonymous as he is not authorised to speak to the media.

In value terms, July imports surged to $4.2 billion from $1.78 billion a year ago, he said.

"Imports were far lower than normal during May and June due to lockdown restrictions. They jumped in July as states started relaxing lockdown restrictions from June," said a Mumbai-based dealer with a bullion importing bank.

Indian authorities had imposed localised lockdowns in the June quarter as new COVID-19 infections surged to a record high.

As the rate of infections came down, they allowed businesses to restart from June onwards in a phased manner.

"Many retail consumers wanted to make purchases for weddings. They resumed purchases as soon as jewellery stores lifted shutters," said Harshad Ajmera, the proprietor of JJ Gold House, a wholesaler in the city of Kolkata.

The demand helped bullion dealers to charge a premium of up to $3 an ounce over official domestic prices, inclusive of 10.75% import and 3% sales levies.

India's gold imports in August could moderate to around 60 tonnes due to rising prices, said a Chennai based bullion dealer.

(Reporting by Rajendra Jadhav; editing by Vinay Dwivedi)