'New schemes will help curb gold imports'

Deepak Kumar | The Dollar Business

As the government on Thursday announced that it will launch the gold monetisation and the Sovereign Gold Bond (SGB) schemes later this year, the industry body said this move will help India curb gold imports with a significant margin.    With implementation of these schemes, the cabinet aims to raise Rs.15,000 crore by curbing demand for physical gold and extracting stationary gold from households, trusts and temples.   The interest rate on gold bonds is expected to be 2-3%. “The idea is to cut down on increasing gold imports. Not much gold is produced within the country. The government wants to capitalise on the demand by reducing the imports. It will also help in narrowing India’s current account deficit,”  Ketan Shroff, spokesperson of India Bullion and Jewellers Association Ltd., told The Dollar Business. This year, the total gold import is set to reach 980-1000 tonnes, up about 26% over 2014. It would also be the second highest imports year since 2008. Citing that gold remains as dead investment, Shroff said, “When gold prices in the global market are less, Indian retailers import gold in bulk. And when prices pick up, they export it to the overseas market. By giving 2-3% interest on deposits, gold imports could be kept in check.” India is the world’s largest gold jewellery consumer market, accounting for 30% of global consumption in 2014. Its consumption increased by 2.5% in the second quarter of 2015. From January-June 2015, India was world’s second biggest consumer of gold products, accounting for nearly 392 tonnes as against over 394 tonnes by China. In April-June 2015, India’s gross gold import declined by 10% to 183.9 tonnes from 205.4 tonnes in the second quarter last year. India’s total gold import stood at 126 tonnes in August 2015. It witnessed a sharp increase since the government imposed restrictions on gold imports in 2013. In 2014, India remained the largest exporter of gold jewellery with export touching $12.1 billion.  

September 11, 2015 | 5:51pm IST.