Imports account for 86% of India’s gold supply during 2016-2020: World Gold Council

Hyderabad: India is heavily reliant on bullion imports to meet its domestic demand. Over the five-year period 2016-2020, imports made up 86 per cent of India’s gold supply, while recycling accounted for 13 per cent and mining accounted for just one per cent. Since the first duty hike in 2012, India has imported some 6,581 […]

Hyderabad: India is heavily reliant on bullion imports to meet its domestic demand. Over the five-year period 2016-2020, imports made up 86 per cent of India’s gold supply, while recycling accounted for 13 per cent and mining accounted for just one per cent. Since the first duty hike in 2012, India has imported some 6,581 tonnes of gold, averaging 730 tonnes per annum.

Indian official imports have continued to grow despite high import duty, with official imports averaging 760 tonnes since the first duty hike in 2012. The higher import duty has led to an increase in unofficial imports with the east/north-east and south states acting as main channels for gold smuggling.

Gold smuggling also has shifted away from sea in favour of air and land routes. The last decade witnessed an increase in doré shipments due to lower duty applicable on it, showed a latest report by the World Gold Council.  

Somasundaram PR, Regional CEO, India, World Gold Council, said, “As the second largest global market, Indian gold demand is heavily dependent on bullion and dore’ imports. Bullion industry has developed over the last 3 decades in India with significant addition to organised refining capacity and an LBMA accredited refinery.”

Challenges remain, however, on dore’ sourcing and organised trading which act as barriers to a more active role for banks and bullion trade in global trading and price setting. High taxes on bullion continue to be a strong incentive for the grey markets that constantly undermine all reforms to make gold liquid and mainstream.

Higher gold imports can have a negative impact on the country’s balance of trade and have, at times, led the government to implement measures to try to curb gold imports Gold trading volumes

In 2020, India imported 377 tonnes of gold bars and doré from over 30 countries – 55 per cent of the imports came from just two countries – Switzerland (44 per cent) and the UAE (11 per cent).

About two-thirds of imported gold is in the form of 995 cast kilobars or 100g bars. 999 purity bars account for much of the remaining one-third of imports. Over the last few years, 100g bars have gained in popularity, with increased demand from small dealers or manufacturers.

Gold officially shipped into India comes via air into 11 cities. In addition to these cities, gold is also imported in Sri City FTWZ, located in the town of Satyavedu in Andhra Pradesh. In 2020, 84 per cent of imports came through airports located in North and South India, with the remaining 16 per cent coming through airports in West and East India.

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