15 Oct 2013 Last updated at 08:13:08 GMT
NEW DELHI (Scrap Monster) : The government restrictions on gold imports into the country and the declining scrap gold supply is seen threatening India’s gold bullion refining industry. According to industry sources, the gold bullion refining is running only at one-fourth of capacities. A large number of gold refineries are on the verge of closure, says Harmesh Arora,MD, National India Bullion Refinery (NIBR).
In a bid to bring CAD under control, the Indian government hiked the import duty on gold bullion imports to 10%. In addition, the import duty on gold jewelry was also hiked to 15%, almost twice the 8% now charged on raw gold. As a result, gold imports to the country plunged by over 80% to 6.7 tonnes in September when compared with the 69 tonnes imported during August this year.
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. Stagnating gold prices have dramatically brought down the sale of scrap gold in India.
Melting of jewelry scrap to convert into 24-carat gold has become a loss-making process and operational capacity has declined to an alarmingly low level. The whole industry is suffering a lack of supply, whether of bullion, mined dore, or scrap jewelry. Further widening of supply gap may lead to closure of gold refining facilities in the country.
Author: Paul Ploumis