10 Oct 2013 Last updated at 08:32:34 GMT
NEW DELHI (Scrap Monster): Stagnating gold prices have dramatically brought down the sale of scrap gold in India. The import restrictions imposed by the government and the Reserve Bank of India (RBI) has led to shortage of virgin gold. As a result, the gold refineries in the country are being forced to shift to gold dores.
According to data released by the Association of Gold Refineries and Mint, the supply of recycled gold declined sharply to nearly 10 tonnes during the second quarter of the current fiscal year. The association anticipates a further fall in supply of used gold during the forthcoming quarter.
The Indian government had imposed tight controls on import of gold into the country. Gold import duties were hiked several times during the year. The 80:20 export restrictions on imported gold had further limited the flow of gold into the country. The customers see all chances of gold supply shortage further worsening in the days to come, which makes them refrain from selling their gold holdings.
In order to make jewellery from gold dores, the refineries need to obtain a license from the Directorate General of Foreign Trade (DGFT). Refineries normally show less interest to import dores due to complicated procedural regulations. The non-availability of used and virgin gold has forced many gold refineries in the country to shift to processing of gold dores.
Haresh Soni, Chairman,All India Gems and Jewellery Trade Federation (GJF) believes that the sentiment can be improved only through proper policy support from the government.
Author: Paul Ploumis