According to a report by the World Gold Council (WGC), India’s gold refining industry has seen significant growth in recent years, with the country ranked fourth in global gold recycling in 2021, after China, Italy and the US.
The report estimated that from 2013 to 2021, India’s gold refining capacity rose by 1,500 tonnes, or 500 percent, to 1,800 tonnes. In addition, 11% of the country’s gold supply in the past five years has come from ‘old gold’; Gold price volatility, driven by future gold price expectations and macroeconomic outlook.
The report titled ‘Gold Refining and Recycling’ also pointed out that amid rising demand for gold in India, recycling will continue to be dominant and the refining industry, which is currently stagnating after a period of transformation, will witness steady growth. will form.
Somasundaram PR, Regional CEO, India, World Gold Council, said, “If the next phase of bullion market recovery is promoted by responsible sourcing, export of bars and consistent supply of dore or scrap, India will become a competitive refining hub. has the potential to emerge. The domestic recycling market is relatively less organized, driven by local rupee prices and economic cycles, but it should be supported by initiatives such as the Revised GMS (Gold Monetization Scheme) as various policy measures sync to make it attractive to mainstream surplus gold. and liquidity is enhanced. through bullion exchanges.”
India’s gold refining landscape has changed significantly over the past decade, with the number of formal operations increasing from less than five in 2013 to 33 in 2021.
As a result, the country’s organized gold refining capacity has grown to an estimated 1,800 tonnes from just 300 tonnes in 2013.
“While the informal sector contributes an additional 300-500 tonnes, it is worth noting that the scale of unorganized refining has fallen,” the report said.
This can be attributed to the government’s tightening of pollution regulations (which led to the closure of many local melting shops), and more retail chain stores recycle old gold using organized refineries.
The report also highlights that jewelery holding periods will continue to decline as younger consumers seek to change designs more frequently; A trend that may contribute to higher levels of recycling.
On the other hand, higher earnings following strong economic growth will reduce outright sales and make it easier for consumers to pledge their gold instead of selling it outright.
“Therefore, it is necessary to support organized recycling with better incentives and technology-based solutions, including end-to-end supply chain of gold,” the report said.
In addition, tax benefits have underpinned the growth of India’s gold refining industry: the difference in import duty on refined bullion to thread has spurred the development of organized refining in India. As a result, the share of gold dore in total imports has increased from just 7% in 2013 to around 22% in 2021.