RBI to take a call soon; move could help bring down jewellery prices.
The commerce ministry is considering a proposal to free the import of gold dore in India, hitherto allowed only through the Reserve Bank of India (RBI) or its nominated agents.
A gold dore bar is a semi-pure alloy of gold and silver, usually created at the site of a mine. It is then transported to a refinery for further purification. After gold ore is mined, the first stage of purification produces a cast bar (gold dore) that is approximately 90 per cent gold. The other 10 per cent comprises mostly metals like silver and copper.
To this effect, a proposal has been sent to the department of economic affairs in the finance ministry. RBI governs the import, since gold is considered to be dual currency for reserve purposes, explained an official.
Gold dore, said the official, is primarily a raw material and there are no exchange-related worries if it is imported and used for making gold jewellery. “With the number of refineries growing in India, raw material availability is an issue. Alternatively, gold refiners depend only on scrap, which is not available readily for use. People hold on to the scrap, in anticipation of benefiting from the rising gold prices,” explained an industry source. There are around 25 gold refineries in India.
Officials further explained that this could help in brining down the prices of gold and gold ornaments in India, since the prices follow trends in the international market due to the fact that refined gold is imported for making gold jewellery. Besides, there is huge domestic demand for gold jewellery.
India produces about 10 tonnes gold a year. Of this, about eight tonnes is extracted as a by-product of copper by Hindalco Industries. Domestic refineries, including Hutti Gold, the only gold mining company in the country, contributes another two tonnes.
Gold is refined mostly in Zurich (Switzerland) for producing bars and coins approved by the London Bullion Markets Association (LBMA). Since LBMA standard gold bars are globally recognised, all trading activities are executed on the basis of the price announced by it, said an industry source. Last year, the finance ministry removed both basic customs duty and special additional duty for gold dore bars of up to 80 per cent gold purity, imported for refining and manufacturing serially numbered gold bars.
