Page 28 - Bullion World Volume 04 issue 12 December 2024
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Bullion World | Volume 4 | Issue 12 | December 2024
B ullion W orld | V olume 4 | I ssue 12 | D ec ember 2024
AGRM Pre-Budget
Proposals for the Precious
Metals Refining Sector
Introduction
The Association of Gold Refineries & Mints (AGRM), representing 43 BIS-accredited refiners,
submitted their pre-budget proposals highlighting critical concerns faced by the refining industry and its
potential contributions to India's economy. Collectively, AGRM refiners contribute approximately USD
2.5 billion annually through import duties and GST and refine 200-250 tonnes of gold annually,
addressing nearly a third of India's gold consumption. Despite recent policy adjustments, the industry
faces significant challenges that threaten its sustainability and competitiveness.
Review of Duty Differential:
The current duty differential between raw materials (gold dore) and finished bullion
imports, introduced under the India-UAE CEPA agreement, has resulted in financial
strain on refiners:
• Current Situation: Dore bars face a 5.35% customs duty, whereas bullion
Key Challenges imported under CEPA is taxed at 5%.
and Proposals
• Impact: Refiners report negative net margins (-0.80%), reduced capacity
utilization (below 25%), and escalating operational expenses (increased by 30-
40% over the last four years).
• Proposal: Increase the duty differential to 1.65%, ensuring alignment with
historical margins (2012-2015), which supported sectoral health and sustainability.
• Current Restriction: Banks are restricted from sourcing bullion locally from Good
Permission for Delivery refineries.
Local Bullion • Proposal: Allow banks to procure bullion locally, which would enhance capacity
Sourcing utilization (currently 20-30%), bolster the “Make in India” initiative, and generate
employment.
AGRM proposes greater integration with GMS:
• Initiative: Refineries would partner with banks to collect and evaluate gold deposits
Gold in branches, offering equivalent-weight gold bars or monetization options to
Monetization depositors.
Scheme (GMS)
• Outcome: Mobilize idle gold, providing a secure and transparent mechanism for
depositors, and reduce India's gold imports.
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