Around 50 tonnes of gold entered India in the first quarter (January-March) of 2014 through smuggling, estimates the World Gold Council (WGC), due to continued restrictions on imports through official channels.
“Broadly, we estimate 20-25 per cent of gold demand is met through smuggling, which continued in the first quarter of (calendar year) 2014 as well,” said Somasundaram P R, managing director of WGC India at the issue of its Gold Demand Trend report for the period.
WGC had earlier estimated around 200 tonnes of gold was brought into India through smuggling in calendar year 2013.
“Gold continued to enter through unofficial channels and whilst the estimate of the grey market varies, there is now far great understanding of the adverse impact it is having on the Indian gold industry and genuine consumers,” said Somasundaram.
To curb the current account deficit, the Union government has restricted banks on import of gold coins and medallions.
India primarily imports gold jewellery from West Asian countries. Gold sales in the region rose to 66.2 tonnes in the first quarter of 2014, compared with 57.1 tonnes in the corresponding period last year. Gold sales in Saudi Arabia, Egypt and the UAE moved up nine per cent, 26 per cent and 16 per cent, respectively.
The government is concerned about the rise in smuggling and there are expectations that it will take some steps to control this. Overall gold demand is expected to moderate in the second quarter of 2014, since a price decline is expected and consumers might defer purchases.