India still largest consumer of gold: PHD Chamber

The World Gold Council in its Gold Demand Trends Report, 2013 has estimated higher gold imports in China at 1066 tonnes as compared with gold imports in India at 975 tonnes during the year, 2013. However, India's import demand if estimated on the basis of official imports of gold and smuggled gold is still higher at 1175 tonnes in 2013, said Mr. Sharad Jaipuria, President, PHD Chamber of Commerce and Industry.

The demand for gold amongst the Indian consumers is still robust and it is fed by many alternative sources including recycled gold, domestic production and unofficial imports/smuggled gold, said Mr. Jaipuria.

According to World Gold Council, the sharp decline in the official import of gold into India led to an increasing amount of this demand being met by gold imported through unofficial channels. Thus, the council estimated smuggled gold in India at 200 tonnes for 2013, which if added to the official gold figures of 975 tonnes becomes 1175 tonnes which is higher than the imports by China at 1066 tonnes, said Mr. Jaipuria.

The reasons are mainly attributed to increased restrictions by the government on the import of gold in India inclusive of higher import duties, strict import quotas and restrictions on gold-related lending and coin sales in order to reduce the current account deficit, he added

So, going ahead India should remove curbs on gold imports as it encouragers the informal trade/smuggling. Since, trade deficit and CAD both are under control and are improving month after month, at this juncture, curbs on gold may be withdrawn to facilitate India's gems & jewellery sector which is not only a major foreign exchange earner but also a major sector for employment generation in the country.

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