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Gold purchase reduces in India this year.

Date: 12-08-2016
Subject: Gold purchase reduces in India this year
KOLKATA: A rally in gold prices since the start of 2016 is likely to reduce purchases in India, the world's second largest consumer, bringing down imports to 750-850 tonne this year from 864.3 tonne last year, according to the World Gold Council.

Though a lesser quantity of gold may enter India through the official route, there could be a surge in smuggled gold as new gold purchase regulations have boosted unofficial trading of the metal.

According to industry executives, smuggling networks are likely to import 140-160 tonne of gold this year as against 120 tonne in 2015. "In Q2 of 2016, nearly 45 tonne of gold entered India through the unofficial route," Somasundaram PR, managing director-India at WGC, told ET.

He said making disclosure of tax code or permannent account number (PAN) mandatory for purchases above `2 lakh and the introduction of more compliances to make the sector transparent may pose a challenge to the country's gold trade in the transition period.

"It is true that a large section of Indian population does not have PAN cards. Any purchase using PAN cards should be linked to the mobile phone, where the person gets an SMS (when gold is bought on his PAN). This will prevent misuse of PAN," Somasundaram said. Gold demand in India fell 18% year-on-year to 131 tonne in the quarter to June.

A 43-day strike by jewellers to protest against the imposition of 1% excise duty on gold jewellery hit demand. In the first half, gold demand was 247.4 tonne, a drop of 29.6 per cent from year-ago period. Gold purchase reduces in India.

Source : economictimes.indiatimes.com

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