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  • India can be a Competitive Gold Refining Hub: WGC

    Wed June 22 2022


    Nearly 468 tonnes of old gold had been used in the last five years to partly meet India's domestic consumption of about 850 tonnes annually, according to a report by the World Gold Council (WGC).


    Upward movements in the gold price, particularly in the last two Covid years, had led people to offload old gold in the market.


    Prices had shot up to ₹57,000 per 10 gms in 2020, which cooled by the end of 2021 to around ₹48,000 but again crossed ₹51,000 after the Russia-Ukraine war started earlier this year, as people started parking money in the yellow metal which is seen as a safe haven asset.


    The WGC on Tuesday launched a report titled 'Gold refining and recycling', which highlights that amid India's growing demand for gold, recycling would continue to be key and the refining industry would witness steady development.

    "India has the potential to emerge as a competitive refining hub if the next phase of bullion market reforms promotes responsible sourcing, exports of bars and consistent supply of dore (impure gold) or scrap," Somasundaram PR, WGC's regional chief executive-India, told ET. "The Domestic recycling market, driven by local rupee prices and economic cycle, is relatively less organised, but should gain support from initiatives such as revamped GMS (Gold Monetisation Scheme) as various policy measures sync to make it attractive to bring surplus gold mainstream and liquidity is enhanced via bullion exchanges."


    According to the report, holding periods of jewellery would continue to decline as younger consumers look to change designs more frequently, a trend that could contribute to higher levels of recycling. On the other hand, higher incomes following stronger economic growth will reduce outright selling and consumers will find it easier to pledge their gold rather than sell it outright.


    The country's organised gold refining capacity has surged to an estimated 1,800 tonnes a year from 300 tonnes in 2013. While the informal sector is estimated to account for an additional 300-500 tonnes, the scale of unorganised refining has fallen.


    Tax advantages have underpinned the growth of India's gold refining industry: the import duty differential on dore over refined bullion has spurred the growth of organised refining. As a result, gold dore's share of imports rose from 7% in 2013 to around 22% in 2021.