Despite demonetisation-led India’s demand for gold would decline to 650-750 tonnes in 2016 because of measures adopted by the government to discourage sales of the metal, the World Gold Council (WGC) said in its latest report released on Tuesday.
The country’s gold demand would average 850-950 tonnes every year till 2020 on transformational changes in the system to curb black money and increasing focus on transparency, the report said. A fifth of India’s demand in 2016 was met by smuggled gold, which has become prominent since 2013, when the government started Budget 2017 raising the import duty on the metal. The report estimates gold smuggling at 120-135 tonnes in 2016, almost similar to 2015.
WGC Managing Director Somasundaram PR said smuggling had declined sharply since note ban. “Together with introduction of the goods and services tax, mandatory hallmarking and a push by jewellers to promote non-cash payments, the gold trade will become more transparent,” he added. It estimates gold holdings by households at 24,000 tonnes with temples and other religious places holding 2,000-4,000 tonnes. The WGC has sought incentives for electronic trade in jewellery and exchange traded funds. Physical and electronic transactions in gold and jewellery now attract similar duties. “An Indian benchmark price for gold will usher in transparency,” Somasundaram said.