An increase in the import duty hasn’t dampened Indians’ appetite for gold. It’s just pushed the market underground.
Gold is such an important part of the Indian economy, people will do whatever they have to in order to get their hands on the yellow metal – including skirt the law. According to a recent report by the Hindu, occurrences of gold smuggling have risen rapidly in the wake of higher import taxes.
Ever since the import duty on gold was raised to 10%, the country has reportedly witnessed a rapid rise in the quantum of gold brought into the country illegally. Currently, government levies total 13%, including IGST of 3%.”
How would you celebrate the birthday of a government building?
Maybe send out a press release? Perhaps hold a little assembly and let some politician ramble for a while about how great the building is? Maybe host an open house for the public? Or here’s an idea. Just ignore it. After all, it’s a government building. Who really wants to celebrate that?
Well in India, they go for a little more swanky soirée when it comes time to celebrate their government buildings. The Karnataka Assembly building will turn 60 this month and the state assembly secretariat proposed a lavish 2-day festival complete with a gift of gold biscuits for each lawmaker.
Gold demand rose 31% year-on-year in September. Imports came in at 48 tons, according to a Reuters report.
Higher purchases by India, the world’s second-biggest consumer, could lend support to global prices that are trading near their highest level in a week. The higher imports may also widen the South Asian country’s trade deficit.”
The Indian government has reversed a tax rule that was putting a damper on gold demand in the country.
The government included Indian jewelers under the Prevention of Money-Laundering Act last August. The rules increased compliance requirements for high dollar jewelry purchases. Buyers had to provide their income tax identity for transactions above 50,000 rupees ($766). According to the Economic Times, the requirements were hindering high-value deals.
The World Gold Council has announced plans to form a committee that will help set up India’s first physical gold exchange. Officials say they hope to have the exchange up and running in 12 to 18 months.
The committee will not actually set up the exchange, but will provide guidance. WGC Indian operations managing director PR Somasundaram told Bloomberg the council is in the process of creating an industry committee of jewelry trade associations, dealers, miners, regulators, foreign and Indian banks, and eventually some consumers.
Indians love gold. Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold imports into the country nearly tripled year-on-year in August. India ranks as the second largest gold consuming country in the world, trailing only China. But gold isn’t the only precious metal Indians covet. They also buy a lot of silver.
According to a new report by the Silver Institute, India consumed 160.6 million ounces of silver in 2016, accounting for 16% of global silver demand.
A few Fridays back, I shared some of the innovative ways people have come up with to smuggle gold. Like I said in that article, gold smuggling is a very lucrative business. People want gold, and they’ll go to great lengths to have it. But smuggling isn’t as easy as you might think, and people have put gold in some places … Well, let’s just say it couldn’t have been a comfortable experience.
OK – I’ll just come out and say it. More than a few smugglers have resorted to sticking gold up their butts.
Despite rising prices, a tax increase, and government attempts to tighten regulation of the jewelry industry, gold continues to flow into India.
Gold imports into the country nearly tripled year-on-year in August. An estimated 60 tons of the yellow metal flowed into the Asian nation last month, up from 22.3 tons in August 2017. This continues a trend for the year. Over the first 8 months of 2017, India’s gold imports climbed to 617.5 tons, a 158% increase over 2016.
People eat gold.
Yes. I know I’ve touched on this before. But I still don’t get it.
I came across a story this week about a caterer in India who was asked to come up with something that would stun guests at a wedding. So, V Sai Radha Krishna decided he would serve rice covered in 24-karat gold leaf.
Gold makes up an integral part of the economy of India in general, but for Indian women, it often serves as an economic lifeline.
Indians have a love affair with gold. The country ranks as the second largest consumer of the yellow metal in the world. It’s not just a luxury. Even the poor buy gold in India. The yellow metal is interwoven into the country’s marriage ceremonies, and cultural and religious rites. Indians also value gold as a store of wealth, especially in poor rural regions. Two-thirds of India’s gold demand comes from these areas, where the vast majority of people live outside the official tax system.