India to slash duties on scrap and raw gold imports

Section:

By Sangita Shah
Financial Express, Mumbai
Friday, August 18, 2006

http://www.financialexpress.com/fe_full_story.php?content_id=137730

The government is soon likely to relax scrap and raw gold import norms, paving the way for greater and cheaper imports of the precious metal into the world's largest gold- consuming country.

Sources close to the Reserve Bank of India stated that the concerns regarding raw gold, which will be imported by classifying it under brass imports, have been resolved. "The government is likely to announce reduction in import duty on raw gold to bring it on par with pure gold," the industry veteran added.

Currently, the import duty on pure gold is 1.5 percent, while it is more than three times that at 5 percent on raw gold imports. This has discouraged refiners from setting up shop in India.

On the other hand, India has imported an average 500 tonnes of pure gold annually for the past 10 years. However, if the import duty is brought on par with raw gold, India may see a few gold refineries being set up that meet international standards.

Currently, India does not have a single London Bullion Market Association (LBMA) approved refinery. LBMA requirements for assaying standards and bar quality are strict, and only those large bars produced in their approved refineries are acceptable in the London market as "good delivery."

"India has a huge potential to make a viable business proposition for setting up a gold refinery if the import duty on raw gold is slashed," said Manan Desai, Citibank Corp.'s chief operating officer for the Middle East and Indian subcontinent.