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Domestic gold refining and Make in India campaign

Mr. James Jose, Secretary, Association of Gold Refineries and Mints



Announcements in the recent Union Budget and in the subsequent days have indicated the mind-set and approach of the Govt towards gold imports to India, wherein gold is treated as a non-essential item of import, adversely impacting the current account deficit of the country. Even when we appreciate the initiatives in this direction by increasing the import duty on bullion by 10-12.5%, the realities at the ground level may give confusing signals.


The country has been importing around 600-800 tonnes of bullion per annum for the past 2 decades, even when the import duty was Rs.100 per ounce with sales tax of 1%, or the 10% import duty with 3% GST. This is because of the fact that gold purchases /consumption in India is traditionally linked to religious, social and cultural factors and the consumer demand patterns are inelastic to gold price, import duty or official channel supplies.


Such being the case, a meaningful way to bring down imports is to encourage /enhance the domestic recirculation / remonetisation / recycling of the 25,000 tonnes of domestic gold holdings available above ground in the country and not to depend too much on below the ground mine gold. The gold refining industry in India has built up world class technologies and capacity of 1500 tonnes per annum and this industry is capable of substituting bullion imports with domestic supply.


Towards this end, our association has been interacting with the Govt in initiating the fine tuning of the necessary policy frame work.



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Under the GMS, encourage individuals to deposit gold with Banks up to 500gm per head

Whereas Income Tax follows the principle of excluding 500 g gold from declaration / seizure, a formal notification to this effect will reassure apprehensions of general public and pave the way for encouraging mobilisation of gold holdings under the GMS


Enabling banks & jewellers to adopt a proactive role for gold deposit mobilisation under the GMS and in utilising the gold collected under the GMS

a) Domestic gold loans to domestic jewellers shall be only from

GMS gold deposits, and not from imported gold. (Gold loans

from imported gold shall be restricted only for exporters


b) Banks shall be permitted to decide their own rate of interest

and tenure of loan for gold metal loans

c) On maturity, gold deposits may be redeemed in the form of

gold or in Indian Rupees.

d) Jewellers to maintain gold accounts with banks, thereby

facilitating collection of gold from customers by debit to

jewellers gold account and credit to customers’ account.

e) Like Rupee banking, first the customer has gold metal credit in its metal account and then only can customer select quantity and tenure of its deposit with bank.


Setting up of Bullion spot exchange

This will bring in transparent uniform benchmark pricing for gold across India, enhancing consumer confidence to maintain gold account and deposit gold from the metal account.


Banks to open gold metal accounts for customers , similar to rupee savings accounts

A gold metal account with a bank will permit seamless transfer of deposited gold between various segments such as.

a- Gold can be used for earning interest for varying tenures

b- this gold deposit’s certificate shall be used for mortgaging /

loan from banks and NBFCs

c- simplifying gold loans by credit to jewelers account and debit to Bank’s metal account; easy tracking of deposits / loans


d- establish a Gold Clearing Mechanism akin to rupee clearing, with an integrated vaulting system across India.


Integrating with commercial Banking:

Banks be permitted to source domestically refined gold from

domestic refineries having acceptable quality standards.

Banks be permitted to “buy back” their minted coins to increase

the pool of gold mobilised / recirculation.


Transforming commercial banking to global gold-banking eco-system

a. Domestic accredited refineries must be permitted tomaintain Gold & Silver Precious Metal Accounts for their precious metal transactions with overseas bullion banks & institutions.

b. This will enable round the year refining, enhance ability

to enter into long-term mine dore contracts, and increase

economic value add activity in India.


Disclaimer: Views are personal and not the views of the publisher