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The restrictions introduced by the Indian government on importing gold through official channels has had the intended effect. Total gold consumption in India fell significantly to 148 tonne in the quarter ended September 2013, compared to 310 tonne in Q2 of 2013 or June quarter of this year.
This was revealed in the latest World Gold Council Gold Demand Trends report, which covers the July-September 2013 period.
In the quarter ended September 2012, India’s gold demand was 210.1 tonne.
Compared with the previous September quarter, India’s gold demand has fallen 32% whereas China’s demand in the same period was up 18% at 209.6 tonne, surpassing India’s demand by a huge gap.
India’s gold demand fell because of government’s measures that included an increase in import duty to 10% and stringent restrictions on imports by linking imports with exports under the 80:20 rule.
However, the council categorically said that the two factors helped demand to stay even at 148 tonne and without which the demand would have been much lower. The two factors are also behind the significant increase in supply of recycled gold, which went up five fold to 61 tonne in the September 2013 quarter when global recycled gold supply fell by 11%.
Another factor that filled up the supply pot was gold imports through illegal channels, according to the council.
“The intervention of the Indian government in restricting gold imports to the country is obviously reflected in the official levels of demand this quarter, but this by no means indicates that the appetite for gold in India is waning. We have seen some increase in demand in other countries which have close links with India, some of which may be making its way back to the country through illicit channels, which have reopened in recent quarters following a long period of inactivity,” Marcus Grubb said.
