Demand in September quarter drops 32%; Instances of Smuggling rise with high prices.
The government will be pleased by its efforts to clamp down on gold imports.
Gold demand has dropped 32% in the quarter ended September to 148 tonne over the year-ago period as import duty and other curbs made the yellow metal expensive, according to World Gold Council (WGC).
Jewellery demand, too, fell 23% to 104.7 tonne during the quarter while bar and coin demand was down 48% to 43.5 tonne.
Imports, too, fell by a whopping 75% in the September quarter to 85 tonne over the June quarter.
Demand is unlikely to hit the 1000 tonne forecast for the full year, paving the way for China to supercede India as largest consumer of gold this year, the council said.
“China’s gold demand is expected to be anywhere between 900 and 1,000 tonne and is expected to remain at the higher end of the spectrum. India’s gold demand is also expected to be around the same levels but at the lower end of the range,” Somasundaram P R, managing director (India), WGC, said.
Till September, India’s demand stood at 716 tonne whereas China’s demand was 798 tonne.
Still, India’s 2013 (calendar year) imports will be marginally higher than 860 tonne in the last year, Somasundaram said.
Since January India has hiked import duty on gold to 10% and has introduced 80:20 norms under which 20% of imported gold has to be compulsorily exported to contain the runaway current account deficit (CAD).
However, the curbs have led to a significant rise in smuggling.
The WGC report said, “Gold entering the country unofficially through India’s porous borders helped to meet pent-up demand. It is likely that unofficial gold will continue to find its way into the country to satisfy demand. Reports that a good market for ten tola2 bars is re-emerging, due to the relative ease with which they can be concealed, reinforce this view.”
Somasundaram said though the increase in smuggling cannot be quantified but it is clear it has picked up with the increase in seizure instances.
“Also, demand in neighbouring countries such as Thailand has increased and some of this may be because of India demand,” he said.
The high gold prices at around 29,000-30,000/10gm levels has also led to an increase in recycling of the yellow metal, which can go a long way in keeping the gold imports down, experts said.
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