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Industry Leaders Say India Must Emerge as a Gold Trading Hub

May 3, 2012 3:45 AM   By Dilipp S Nag
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RAPAPORT... India needs to capitalize upon its gold consumption in order to strengthen its position as a trading hub ‎for gems and jewelry, industry experts concluded.‎

‎“We should establish India as a brand to reckon with and ascertain its leadership position ‎in the global arena,” said Rajiv Jain, the chairman of the Gem & Jewellery Export Promotion ‎Council (GJEPC), during fifth annual International Gold Summit on Wednesday. ‎

Swings in the global risk sentiment, the prevailing crisis in the eurozone, tension in the Middle ‎East and the volatility of the dollar will be key factors in determining the price of the yellow ‎metal in the future. Jain noted that gold remains a desirable investment option, despite ‎prices jumping 120 percent in the past three years.‎

He stated that exports of gems and jewelry were pegged at $42.83 billion in India's fiscal year, which ran from April ‎‎2011 to March 2012, and accounted for 14 percent of India’s total merchandise exports. According to ‎the Associated Chambers of Commerce and Industry of India (ASSOCHAM), which ‎organized the summit, Indian households collectively own approximately 18,000 tons ‎of gold. It said that the country's annual demand for gold is set to rise from 933 tons in 2011 to 1,200 tons by 2020.

The size of the domestic physical bullion market is estimated to be valued at ‎more than $57 billion (INR 3 trillion) per year, ASSOCHAM stated.‎

S.K. Jindal, the chairman of ASSOCHAM’s investment and investor protection committee, ‎noted that gold prices have increased steadily since the 2008 financial crisis and added ‎that demand should continue to rise due to growing prosperity and higher savings in the country.‎

India needs to graduate into trading global bullion and from simply being a  price taker to a price ‎maker, Jindal said. “It is necessary to remove inefficiencies in the Indian bullion market ‎so that the country can become a global gold trading hub,” he added.‎

ASSOCHAM published a study titled ''India: Golden Bird to Global Gold Trading Hub,'' in ‎which it stated that the recent hike in customs duty on gold imports to 4 percent will not ‎be enough to control gold imports. The country’s gold imports could total $100 billion by ‎‎2016, ASSOCHAM forecast.‎

ASSOCHAM warned that at such levels, gold imports could be a huge burden on the ‎balance of payments and accentuate the current government account deficit. India produces around ‎two tons of gold a year against imports of 933.4 tons.‎
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Tags: ASSOCHAM, Dilipp S Nag, gold, India, Jewelry, Rajiv Jain, Rapaport
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