NewKerala.com

India's Gold Sector Shifts to Investment, Aims to Cut Import Reliance

A joint report by ICRA and ASSOCHAM highlights a structural shift in India's gold sector towards investment-led demand. It identifies scaling up organised refining and recycling as critical to reducing the country's heavy reliance on imports. The report calls for reforms to the Gold Monetisation Scheme and emphasizes the growing financialization of gold through improved loans and regulations. Ultimately, the vision is for India to become a global hub for gold refining, trading, and price discovery.

Key Points: India's Gold Sector Report: Refining & Recycling Key to Growth

  • Shift from consumption to investment-led demand
  • Scale up refining and recycling to cut imports
  • Recalibrate Gold Monetisation Scheme for better uptake
  • Leverage tech and regulation for financialization growth
2 min read

Reducing import dependence through refining and recycling the way to navigate India Gold sector: Report

ICRA-ASSOCHAM report outlines how refining, recycling, and financialization can reduce India's gold import dependence and boost global role.

"reducing import dependence by scaling up organised refining and recycling needs to be prioritised. - ICRA-ASSOCHAM Report"

New Delhi, March 26

India's gold sector is currently undergoing a structural transformation as the industry navigates a shift from consumption-led to investment-led demand. According to a joint report by ICRA and ASSOCHAM, India remains heavily dependent on imports due to negligible domestic mining output.

To address this vulnerability, the joint report emphasized that "reducing import dependence by scaling up organised refining and recycling needs to be prioritised." Key recommendations included continued support for lower import duties on gold dore relative to refined gold and the wider acceptance of IGDS-compliant bars to better integrate domestic refiners with financial markets.

The report also highlighted the need to recalibrate the Gold Monetisation Scheme (GMS), which has seen limited uptake since its inception. Cultural and behavioural factors continue to constrain consumer participation, particularly when sentimental jewellery is involved.

To unlock a larger share of India's idle gold stock, the report suggested "simplifying scheme structures, improving communication on benefits, and leveraging organised jewellers as trusted intermediaries for collection, testing and customer engagement should be considered."

In the financial space, the rapid growth of gold loans reflected an increasing financialization of the metal. Improvements in purity standards and regulatory clarity have boosted lender confidence. "Recent RBI guidelines on valuation, transparency, loan-to-value norms and borrower protection are also positive steps," the report stated.

Additionally, technology adoption is encouraged across the board, with blockchain-based traceability and digital hallmarking seen as tools to "materially improve governance and efficiency" in refining and retail.

The long-term goal for the sector extends beyond domestic consumption. The report envisioned India establishing itself as a global hub for gold refining, trading, and price discovery. By aligning domestic standards with global benchmarks and expanding export-oriented gold products, the country aims to transition from being a price-taker to playing a more influential role. "Collectively, these trends position India to play a progressively larger role in global gold consumption, refining and trade," the report stated.

- ANI

Share this article:

Reader Comments

P
Priya S
Finally, someone is talking about the sentimental angle! Asking people to melt down heirloom pieces for a scheme is a big ask, no matter the interest rate. The suggestion to use trusted local jewellers as intermediaries is spot on. We need a system that respects our cultural attachment to gold while being practical. 🙏
R
Rohit P
The vision to make India a global gold hub is ambitious and I'm all for it! But we have to walk before we can run. First, fix the basic trust issues in the retail market with digital hallmarking. So many people still get cheated on purity. Blockchain traceability sounds great for large refiners, but will it trickle down to the common buyer?
M
Michael C
Interesting read. The shift from consumption to investment is clear with the rise of digital gold and ETFs. The RBI's guidelines on gold loans are a positive step for formalizing this sector. It gives banks and NBFCs more confidence to lend against gold, which can be a crucial credit source for many small businesses.
S
Shreya B
While the report's goals are good, I feel it's a bit too optimistic about changing deep-rooted behavior. Gold is not just an asset here; it's security, it's a gift, it's part of weddings. The government has tried schemes before with limited success. The communication has to be brilliant and continuous, not just a one-time ad campaign.
K
Karthik V
Reducing import duty on gold dore is a key point. It will boost our domestic refining industry and create jobs. Instead of importing finished bars, we should import the raw material and add value here. This is a solid strategy

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50