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Gold dore imports on 8% duty hit bar inflows from Dubai |
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KOLKATA: Import of gold bars from Dubai to India, that attracts a 10 per cent import duty, may take a hit as refiners are importing more of gold dore, which is a semi pure alloy of gold and silver, from Latin America and North Africa.
Gold dore has a gold content of 92-96 per cent and attracts an import duty of 8 per cent.
Talking to ET, James Bernard, director, Dubai Multi Commodities Centre, said, "India imports 220 tonnes of gold bars from Dubai annually, but this may come down as dore imports are increasing in India. Since the duty is lower in case of mined gold or dore gold, it has created adverse conditions for local banks and traders who have to buy gold at higher prices than refiners."
In FY15, India had imported 940.5 tonnes of gold, of which 11 per cent was gold dore. This might increase to 15-20 per cent in FY16 as a number of refiners are keen to bring in dore due to lesser import duty and sell the refined product at a higher price in the market, said industry analysts.
Bernard said that the rise in import duty on gold to 10 per cent by the Indian government and the 80:20 rule (which was removed in November 2014) and the overall instability in managing its gold policy has increased smuggling of gold into India. In fact, the issue of high import duty on gold was raised by the UAE government during Prime Minister Narendra Modi's recent visit to the country.
"While the duty is bad since it encourages smuggling, the changes in policy and disincentive to trade gold bars (duty greater than for dore) hurt the trade," Bernard said.
Refining of gold dore has increased significantly in recent months after the Modi government did not take steps to reduce import duty on gold despite several representations from the gold trade. Industry officials said that several refiners are either exploring the possibility of opening new facilities or are resuming the existing facilities.
Bachhraj Bamalwa, director, All India Gem & Jewellery Trade Federation, said, "Refining of gold dore has increased in the past few months, which is turning out to be a lucrative business for refiners. They are earning a good margin by selling refined gold."
Industry officials said that refining will increase in the next three to four months - during the festive season in India. Dhanteras, an important time for gold buying, also falls during this time.
"If the crop is good, then rural India too will buy gold," Bamalwa said. Indian consumption is pegged at around 900-1000 tonnes this year. Nearly 60 per cent of this will come from rural India, industry officials said.
Source : economictimes.indiatimes.com
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