GST To Boost Imports Of Gold Bars And Coins, Says World Gold Council 

Higher transparency under the Goods and Services Tax will increase the imports of gold bars and coins, the World Gold Council said.

They will contribute nearly a third of the overall demand for the yellow metal in two years, up from a quarter now, the council said. The demand for bars and coins grew 26 percent to 40.7 tonnes in the quarter ended June compared to the year-ago period, said Somasundaram PR, managing director of World Gold Council India. Changing consumer behaviour is another factor, he said.

The jewellery segment, which accounts for nearly three-fourths of India's gold demand, recovered 41 percent to 126.7 tonnes in the April-June quarter compared to the same period a year ago. The first half of last year had seen the demand fall to its lowest since 2009 due to jewellers' strike, regulatory challenges and price hikes.

“We expect the annual gold demand in India to remain in the 650-750 tonne range, with the first half at 300 tonnes,” said Somasundaram.

The demand outlook for the year is lower than the five-year average of about 850 tonnes, he said. “It is because traders and customers are still adapting to policies introduced in the past few years to make gold trade transparent and to the new indirect tax regime.”

Somasundaram said, “If you look at GST compliance as an organised activity, 80 percent of the industry would probably get organised by the next year.” Organised retail trade of gold will make up for 45 percent of the market in the next year and a half, he added.

Globally, demand for jewellery grew at 8 percent year-on-year to 480.8 tonnes, lagging behind the five-year quarterly average of 586.2 tonnes. The overall figure, however, fell 10 percent to 953.4 tonnes compared over the same period, largely due to weak gold exchange traded fund flows which dropped by 76 percent to 56 tonnes.