In all possibility, India’s gold imports are expected to bounce back in 2014. A decline was noticed last year; and this year well, the demand remains unyielding, despite an official clear out. The claim has been made by World Gold Council managing director (India) Somasundaram PR. It is anticipated that gold demand will continue to be in the range of 900-1,000 tonne this year, contrast to 975 tonne a year ago. Somasundaram declined to offer any exact forecast on imports in 2014, as he claims that official import data don’t factor in supplies through illegal channel, hence there is actually no clear picture.
On the other hand, analysts say imports in this calendar year could hit at least 900 tonne in 2014, which is up by nine per cent from last year. Technically, there is no gold production in India, and it itself depends on imports to make supplies to both domestic demand and exports after value addition. Basically what happens is the import capacity goes beyond the yearly supplies. Also jewelers tend to collect in case needed in future.
Also why it is expected that the import would go high in 2014 is because the bigwigs used up their stock last year, post government and the central bank entered in to choke imports, and now they need to refill the stock. Besides that, demand in India, which was beaten by China as the largest gold consumer last year, rose up to 13 per cent to 975 tonne, last year. This is regardless of the fact that the government increased import duty on the valuable metals three times to 10 per cent from four per cent in the beginning of 2013. At the same time, central bank had made it necessary that minimum one-fifth of the imported gold must be kept apart for re-exports.
Reserve Bank of India (RBI) also made known that no fresh share of imports would be possible by a trader until the 20 per cent of the previous imported volume is exported after value addition. Somasundram further stated that as the elementary factors that sustain gold demand in India, including traditional appeal, high inflation and lack of more profitable investment tools haven’t changed. Even though the official measures obstructed supplies, they failed to reduce demand in 2013. And it is expected that the situation will remain same this year as well.
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