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RAPAPORT... International gold miners and privately owned refineries stand to benefit from India's duty differentials, while the nation's treasury could lose out by billions of dollars. An analysis by PriceWaterhouseCoopers (PwC) revealed that profit for privately-owned refineries and the world’s biggest international gold mining companies could be raised by as much as $684 million per year as a result of India’s current duty differential between refined gold and unrefined gold doré. The potential windfall for those international firms is also based on India importing all of its gold as gold doré directly from major gold miners and local refineries offering free refining and shipping services. Analysis by PwC revealed that the existing 2.06 percent duty differential between the level of import customs duty paid on refined gold versus the level paid on unrefined gold has the potential to cost India's treasury $3 billion (INR 180 billion) in foregone duty over a five-year period. Currently, the import duty on refined gold is 10.3 percent, while the import duty on unrefined or doré gold is 8.24 percent. At a gold price of approximately $1,250 per ounce (INR 2,416 per gram), this 2.06 percent differential represents a margin of approximately $25 per ounce. Global refining rates average approximately $2 per ounce and transportation costs roughly $1 per ounce, so the $25 per ounce subsidy enables refineries to offer major international gold mining companies free refining and free transport, while retaining a significant profit margin. In 2013, India imported 825 tonnes of gold. Large gold producers will likely only supply their bulk unrefined gold to London Bullion Market Association (LBMA) accredited refineries. As India’s only LBMA-accredited refinery is majority foreign owned, a significant portion of the additional profits derived as a result of the duty differential may not work its way back into India's economy, the report noted.
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