You are here: Home » Markets » Commodities » commodity gold
Business Standard

India's gold demand rises 9% in 2017 on jewellery purchases, says WGC

Robust December quarter boosts growth; policy on metal likely by July

Dilip Kumar Jha  |  Mumbai 

gold, jewellery

India’s demand jumped 9 per cent in 2017, thanks to robust consumer sentiment in the October-December quarter (Q3FY18) and appreciation in the rupee. Data compiled by the World Council (WGC) showed the country’s demand for the metal was at 727 tonnes for 2017, compared to 666.1 tonnes in 2016. However, this was below the five-year average of 810 tonnes. In Q3FY18, demand was 249.3 tonnes — the highest in over two years. India’s demand was, in fact, higher than China’s demand for the quarter (at 243.8 tonnes) for the first time in nearly three years. A rising equity market helped sustain the high demand. “In October-December 2017, India’s demand was up 2 per cent. reached the highest for the quarter in our 17-year series.

The increase in demand was driven by low prices coinciding with Dhanteras, a positive economic condition, and improved consumer sentiment, particularly in rural areas, as the effect of demonetisation wore off,” said Somasundaram P R, managing director, Dhanteras is a festival during which people buy gold; in 2017, it was celebrated on October 17. The government had demonetised Rs 1,000 and Rs 500 notes in November 2016, leading to lower demand. In average rupee terms, prices fell 1.2 per cent in 2017, and increased 5.1 per cent in average dollar terms. This reflected the rise of the rupee against the dollar. India's gold demand rises 9% in 2017 on jewellery purchases, says WGC “The Budget (presented on February 1) had various positive initiatives for gold, such as the development of a comprehensive policy and the creation of a exchange,” said Somasundaram. “This could happen soon, possibly before July,” he added. He said demand was likely to remain between 700 tonnes and 800 tonnes this year, though that would still be lower than the five-year average (810 tonnes). Somasundaram also said the government’s proposal to impose an inheritance tax was unlikely to work. “If people have more than the government’s threshold (250 gm for unmarried women, 500 gm for married women), they will declare it in the names of various family members.” Also, with the cumulative holding with Indian households at 25,000 tonnes, the per capital holding was about 104 gm — much lower than the threshold. Somasundaram also spoke of the need for a standard policy, a delivery standard, and a trade mechanism through a spot exchange. “This could boost the monetisation scheme,” he said. In 2017, doré bars — alloys of and silver made at mines for transport — contributed 27 per cent of imports, the highest ever. In 2016, these imports 230 tonnes. About 120-125 tonnes of came into the country through unofficial channels, said Somasundaram. In 2016, it was 119 tonnes. “A rationalised import duty (currently 10 per cent, along with 3 per cent goods and services tax) would help curb smuggling,” he added.

First Published: Wed, February 07 2018. 00:51 IST
RECOMMENDED FOR YOU