UNITED STATES February 01 2016 2:40 PM
NEW DELHI (Scrap Register): Despite success in one of the Indian government’s gold schemes intended to curb imports, analysts from Capital Economics said they still expect the country to be a major importer of the metal moving forward.
“While the response to India’s Gold Monetization Scheme (GMS) has been fairly muted so far, the Sovereign Gold Bond Scheme (SGBS) has been a success, having attracted the equivalent of almost four tonnes of gold demand in less than three months,” noted Simona Gambarini, the U.K.-based research firm’s commodities economist.
Going forward, Capital Economics thinks that some of India’s gold imports for investment purposes could be displaced by the gold bonds, but the country will continue to be a major importer of gold in the near future.
In 2015, the Indian government introduced the GMS and SGBS in an effort to reduce the country’s ballooning gold imports by providing incentives for Indians to bring in the gold held in homes.
Capital Economics expects the overall impact on India’s gold imports to be fairly limited, at least in the short term. Capital Economics remains skeptical about whether the GMS can ever be effective, but they think that the SBGS will eventually succeed in curbing gold imports.
India’s gold imports, she continues, should increase by 4% in 2016. “The relatively conservative growth rate reflects the relative success of the SGBS and the possibility that the Indian government might reinstate some form of import curbs should oil prices recover strongly,” she added.