 "Duty relief pushes unrefined gold imports")
In a significant shift in the nature of bullion import into India, dore (unrefined gold) was nearly a fourth of overall inward shipments in the June –September quarter. Data compiled by the World Gold Council (WGC), market development body for the sector's mining industry, showed India’s overall gold import at 300.6 tonnes in the quarter, of which dore was 66.1 tonnes, the highest ever. In the same period a year before, import of dore was 11.8 tonnes of the total bullion import of 242.6 tonnes. Dore import this July–September was nearly a fourth higher than its total (50 tonnes) for all of calendar year 2014.
Dore import offers better margins for domestic refiners. Better margins also mean higher wrestling power for domestic refineries in determining the prices in global markets, where premiums normally go up during festive demand. Earlier, these refineries were surviving with gold recovery through scrap processing, resulting in low capacity utilisation.
“Lots of small-size refineries have emerged in the past few years in tax haven regions. With levy exemptions, local refineries have experienced better margins on processing dore into India than import of pure bullion. So, they have increased its import in the past few quarters,” said Somasundaram P R, managing director of the WGC's arm here. As compared to the 10 per cent import duty on refined bullion, the government cut the customs duty on import of dore to eightper cent. This and local levies' exemption offer better refinery margins. Consequently, refineries have improved their operating capacity to 50-60 per cent from 30-35 per cent about a year before.
“The government’s focus on the gold monetisation scheme would help improve the standards of Indian refineries to world class. It’s good that Indian refineries are getting better margins through processing of imported dore and value addition in local refineries is going up through minting of coins. Looking at all these, dore import should continue to rise in future as well,” said Somasundaram.
Unrefined gold into India is brought from North and Latin America, apart from some African countries.
Dore import offers better margins for domestic refiners. Better margins also mean higher wrestling power for domestic refineries in determining the prices in global markets, where premiums normally go up during festive demand. Earlier, these refineries were surviving with gold recovery through scrap processing, resulting in low capacity utilisation.
“Lots of small-size refineries have emerged in the past few years in tax haven regions. With levy exemptions, local refineries have experienced better margins on processing dore into India than import of pure bullion. So, they have increased its import in the past few quarters,” said Somasundaram P R, managing director of the WGC's arm here. As compared to the 10 per cent import duty on refined bullion, the government cut the customs duty on import of dore to eightper cent. This and local levies' exemption offer better refinery margins. Consequently, refineries have improved their operating capacity to 50-60 per cent from 30-35 per cent about a year before.
“The government’s focus on the gold monetisation scheme would help improve the standards of Indian refineries to world class. It’s good that Indian refineries are getting better margins through processing of imported dore and value addition in local refineries is going up through minting of coins. Looking at all these, dore import should continue to rise in future as well,” said Somasundaram.
Unrefined gold into India is brought from North and Latin America, apart from some African countries.