New Delhi: The government is contemplating to impose fresh curbs on import of gold by big private agencies to bring down its consumption, after a report by World Gold Council suggested a higher than expected increase in sales of yellow metal.
Following the higher sales, World Gold Council said on Thursday that India has emerged as world’s biggest gold consumer beating China. India had lost its number one position to China in 2011.
The government, however, is not enthused by the tag of the world’s number one gold buyer. Officials worry that an increase in gold imports could affect the country’s current account deficit.
Acting immediately, the finance ministry officials held a review meeting on gold on Thursday.
The measures which are being looked at are restricting imports by private trading firms, which started importing gold around the middle of this year after being barred from doing so from July 2013.
A decision is expected to be taken in next few days.
According to World Gold Council (WGC) report on Thursday while global demand for gold was down just two per cent to 929 tonnes, India’s demand was up by 39 per cent. The demand for gold in India for July-September 2014 (third quarter, Q3) was at 225.1 tonnes to overall Q3 demand for 2013 (161.6 tonnes).
India’s Q3 gold demand value was Rs 56,219.3 crores, a rise of 31 per cent, said WGC. Significantly, the total jewellery demand in India for Q3 2014 was up by 60 per cent at 182.9 tonnes. However, the total investment demand for Q3 2014 was down by 10 per cent at 42.2 tonnes in comparison to Q3 2013 (47.1 tonnes).
“The third quarter 2014 demand for gold jewellery was up 60 per cent reflecting partly the intrinsic nature of demand and partly the unusually low base of 2013 that was impacted by the introduction of a range of duty increases and restrictions,” said Somasundaram PR, managing director, India, World Gold Council.
He said that the third quarter can be viewed as a normal one for gold demand “in spite of the unfulfilled expectations of a duty cut and policy relaxations from the new government.”
“The demand for gold around Diwali mirrors the general optimism we see in India in relation to the economy, reinforcing the average household savers’ traditional faith in gold and the increased economic relevance of this asset class due to various uncertainties on the horizon,” he said.
He said that it is now beyond debate that import restrictions have had little impact on the demand for gold and “yet have strengthened the unauthorised supply channels and seems at odds with the overall sentiment that defines the new government’s business approach.”
“The policy environment should allow the gold trade to operate in a free and transparent manner,’ he added.
