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World Gold Council wants India to put idle gold stock to use

With an estimated 25,000 tonnes of gold in Indian households and temples, the government needs to monetise it: WGC.

The World Gold Council is bullish on India. Aiming to target a five-fold increase in gold jewellery exports to $40 billion by 2020, from the current level of $8 billion, the Council has urged the Indian government to find ways of mobilising and monetising household savings imbedded in gold stocks. 

Indian households have an estimated 22,000 tonnes to 25,000 tonnes of gold. 

Asking the world’s second largest gold consumer to put its gold to use, the World Gold Council (WGC) has suggested that India should aim at becoming the “jeweller to the world”.

The WGC has noted that as the country attempts to put to use its gold lying idle with households and temples, it can reduce its dependence on imports in the next five years.

In its Vision 2020 document for the country, unveiled at the second edition of the India International Bullion Summit organised by the India Bullion and Jewellers Association, the WGC has noted: “Our vision for gold is that it should be put to work for the economy, creating jobs, developing skills, generating exports and revenues, an essential part of the financial, economic and social structure of the country.”

Stating that India’s love affair with gold is “timeless, spanning centuries and millennia. It is much more than just a precious metal. It is part of the fabric of Indian culture and an inseparable part of our belief system,” the Council has noted: “For most Indians, gold is sacred; an embodiment of divinity and a symbol of purity, prosperity and fortune that can adorn the body and celebrate life.”

The WGC’s vision envisages the creation of five million new jobs across the gold value chain: manufacturing, retailing, assaying, recycling, etc. 

“To achieve this, artisans need to be empowered further by training and skill development. Around 40% of the country’s gold demand must be satisfied through domestic stocks,” said WGC managing director (India) Somasundaram PR, addressing the Summit in Mumbai.

Asking the government to adopt a stable policy regime, Somasundaram said around 60% of the demand in the country could be met via imports and mining.

“There should be a big and meaningful thrust to enhancing gold deposit schemes, extending duty benefit and import entitlement for domestic gold deposits,” he told the gathering. 

People’s penchant for gold in India and the consequent high gold imports for decades have made Indians the world’s largest hoarders of the precious metal. Since India barely produces any gold domestically, imports of gold worth billions of dollars every year affect its trade balance.  

The country imported gold worth $53.80 billion in 2012-13, while its exports of gold items, both jewellery and investment products such as bars and coins, stood at just $18.28 billion. 

In 2013-14, though gold imports crashed to just over $30 billion, exports of gold products stood at $11.04 billion, with the government saying its measures to contain bullion imports had yielded results. 

Some 2,000 delegates from India and countries like Hong Kong, UAE, the UK and Turkey participated in the two-day Summit deliberations. WGC’s Somasundaram said the Indian government must monetise household stocks the Turkey way, to maintain trade balance, and contain the current account deficit.

India has also been asked to target 75% of the gold sold to be standardised and hallmarked in the next five years. It should also provide higher loan-to-value ratios for hallmarked jewellery, and ensure mandatory hallmarking for pieces above a designated selling price, the WGC said. 

WGC has also suggested that the Indian government launch a “Karigar (artisan) welfare scheme” towards skill development and training of artisans and promotion of a “gold tourism” circuit, showcasing handcrafted Indian jewellery.

“This vision is to outline objectives for the industry that address the savings habit underpinning gold demand, support value addition, increase employment opportunities and benefit the industry in an organised way without curbing supply or impacting the current account deficit,” the WGC report noted.

It has added that this would allow the gold trade to operate in a free and transparent manner for the benefit of millions of households, and eventually lead to increased economic wealth for the nation.

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