Indian Gold Market

Overall Rating: star ratingstar ratingstar ratingstar ratingstar rating[5/5]Total Votes [ 13 ]  
Rate this page:
Indians have a huge fascination for gold. This is evident in the fact that India is the largest consumer as well as importer of gold in the world. Gold plays a very important role in the social, religious and cultural life of Indians. India Gold Market looks poised to achieve greater heights given the fascination for gold in the country. India consumes about 800 MT of gold which accounts to about 20% consumption of gold globally. More than 50% of this is used for making gold jewelry.

Size of India Gold Market

The domestic India gold market is estimated to be more than US$15 billion and is expected to rise significantly in the coming years. During April 2008 to February 2009, gems and jewelry worth US$ 17.79 billion was exported from the country. United Arab Emirates imported more than 30% of gems and jewelry from India, making it the largest importer from the country. Hong Kong was the second largest importer with 25% followed by United States with 20%. The gem and jewelry industry accounts for more than 10% of India's total commodities exports.

Gold certification in India

The government has taken steps to protect the public from buying adulterated gold; Hallmarking of gold jewelry is one such step. Hallmarking of gold jewelry indicates the accurate finding out and official recording of the proportionate content of precious metals present in gold. The marking is done either by laser marking machine or by punches. Hallmark is the official mark used in several countries across the world as an assurance of purity or fineness of gold jewelry. The Bureau of Indian Standard or BIS was named by the Government as the lone agency in the country for providing hallmarking of gold jewelry under the provisions of the BIS Act, 1986.

Indian Standard on Gold and Gold alloys

  • IS 1417 Grades of gold and gold alloys, Jewelry/Artefacts-Fineness and Marking
  • IS 1418 Assaying of Gold in Gold Bullion, Gold alloys and Gold Jewelry/ Artefacts - Cupellation (Fire Assay Method)
  • IS 2790 Guidelines for manufacture of 23, 22,21,18,14 and 9 carat gold alloys
  • IS 3095 Gold Solders for use in manufacture of Jewelry

Features of India Gold Market

Though India is the leading consumer of gold in the world, the gold market in India is largely fragmented and unorganized. Due to the non availability of a benchmark price, the gold prices in India vary very much from region to region. The festive and the wedding season in the country witnesses a heavy demand for gold. Despite the global economic recession, the gold consumption in the country during these times has not abetted.

Factors affecting India Gold Market

The monsoons and the harvest of the country have a significant affect on the sale and purchase of gold in the country. Both these factors determine the amount of purchasing power that people will have, which in turn decides on the amount of gold consumption and other consumptions as well. Purchasing gold and other precious metals on occasions like Akshaya Tritiya is considered to be auspicious.

Recent Hike in Excise and Import Duty

India is the largest importer of gold in the world. India has imported $45.5 billion worth of gold and silver in first three quarters of FY12 itself, which is 53.8% over the year-ago period. A government notification said customs and excise duties would be levied on the value of gold and silver instead of a fixed amount in January 2012. The move is aimed at reducing the negative balance of payments position as gold and silver imports have grown tremendously in-spite of rise in its prices.

Import Duty Excise Duty
Current2% of the value6% of the value1.5% of the value4% of the value
Earlier Rs 300/10 gm.Rs. 1500/kg.Rs 200/10 gm.Rs 1,000/kg.

At a 2% rate, the import duty on gold will double to over Rs 540 per 10 grams at current prices.

Last Updated on 1/19/2012
>> More about India Market