In the quarter ended September 2012, India's gold demand was 210.1 tonne.
India's gold market has been subject to much scrutiny in recent months, as the government has implemented a string of measures intended to deliver on its firm commitment to reduce gold imports, pointed the report.
A relatively subdued quarter in India, as import restrictions took effect, saw demand drop by 23% year-on-year to 104.7t. Nonetheless, year-to-date demand of 452.2t is 13% higher year-on-year, and only 18% below the full-year total for 2012. Demand for gold jewellery among Indian consumers remains strong, but reduced supply has prevented this demand from being fully realised.
Compared with the previous September quarter, India's gold demand has fallen 32%. With higher excise duties and import payment restrictions having had limited impact on the market in the second quarter, the government took a different approach in July. On top of a total ban on the import of gold coins, tight restrictions were imposed on gold bullion imports, tying them to a fixed level of exports. The 80:20 rule now in place stipulates that 20% of all gold imported must be exported before further imports can be made. The confusion over the complex new regulation hampered the market. So, too, did a sharp depreciation of the rupee, which pushed up local gold prices to near record levels, and the seasonal inauspicious period of Shradh (from mid-July and mid-August) during which gold purchases are typically postponed.
India's gold demand fell because of government's measures that included an increase in import duty to 10% and stringent restrictions on imports by linking imports with exports under the 80:20 rule.
Among developing nations, India was alone in seeing an increase in recycling activity which went up five fold to 61 tonne in the September 2013 quarter when global recycled gold supply fell by 11%. In a market short of fresh supply - thanks to the government's supply clampdown - a surging local gold price, together with promotional offers by the jewellery trade (which was short of metal) encouraged a sharp wave of selling, leading to a record quarter for Indian recycling. In other markets lower average gold prices were the main influence on recycling behaviour, making the prospect of selling gold possessions less appealing.
The council said China and India dominated the market for gold bars and coins in Q3, although it is interesting to note that they accounted for a significantly smaller combined market share: 29% compared with 46% in both Q2 2013 and Q3 2012.
Consumer demand in India-Q3-2013 (tonnes)Q3-2012 Jewellery 136.1Total bar and coin investment 83Total 219.1Q3-2013 Jewellery 104.7Total bar and coin investment 43.5Total 148.2% Change Jewellery -23Total bar and coin investment -48Total -32Powered by Capital Market - Live News
