At 800 tonne every year and rising, India is the largest consumer of gold in the world, but when it comes to production and refining of the metal, it fares very poorly.
A comprehensive gold policy is, therefore, an imperative if mismatch between consumption and production is to be addressed, experts said.
To begin with, they said, India does not have a well laid out definition of 'dore', a semi-pure alloy of gold and silver, usually made at the mining site and transported to a refinery for further purification.
The Finance Bill 2011 said dore with up to 80% gold content can be imported through nominated agencies, but under strict conditions and a complex tax structure.
This is an issue, said Harmesh Arora of the Mumbai-based National Indian Bullion Refinery, seeking freeing up of imports completely.
"The first policy step to take is to allow direct import of dore without technical hindrances. Also, it is extremely important to allow import of dore up to 95% gold content as against the 80% limit," Arora said.
China boosted its gold refining business after it gave companies a single-window clearance along with fiscal and infrastructure incentives, he said. Today, the country produces and refines about 320 tonne of gold annually, the most in the world.
The Centre for Monitoring Indian Economy (CMIE) estimates India's consumption of gold will surge 50% to 1,200 tonne a year by 2020-21.
But the country produced and refined only a minuscule 2.46 tonne worth Rs.312 crore in 2008-09, the latest period for which data are available.
That's less than 1% of the value of metallic mineral production in the country.
Rajesh Khosla, chief executive, MMTC-Pamp, a joint venture refinery between the public sector metals trader and the Swiss major, said there has to be a transparent and simple duty structure in place for imports.
"This is essential to encourage domestic refining. Also, there should be no quibbling over gold content in dore since such prescriptions are not applied anywhere in the world," he said.
To boot, dore with 80% gold content is not available in the international market, Khosla said.
Imports are another problem area. Duty on finished gold stood at Rs.300 per 10 gram, while as it is Rs.140 per 10 gram for dore. In addition, dore has to bear an excise duty of Rs.200 per 10 gram against which a refiner gets countervailing duty benefit.
"The implementation of Cenvatable duty should apply if import is through direct route," Arora said.
Commodity specialist Bhargav Vaidya said freeing gold trade is crucial for both the consumer and the refining business.
"Imports of dore should be allowed directly without any reference to a canalising agency to avail of the Cenvat credit directly," Vaidya said.
In 1997, the government-appointed Committee on Capital Account Convertibility stressed it was essential to liberalise policy on import and export of gold, which, it hoped, would curb smuggling and hoarding.
"There has to be a direct link between consumption and imports, and this can happen only when imports are truly liberalised. Fears of misuse are ill-founded," Khosla said.
Anand James, chief analyst, Geojit Comtrade, said there is also a need to increase the number of importers to ensure that the consumer gets the best deal.
Gold is the third most imported item in India, after petroleum and machinery.
India imported gold worth about Rs.58,705 crore between April 2006 and February 2007, which is more than 11% of the country's total imports by value.
The government collected customs duty worth Rs.2,553.52 crore in the last fiscal from gold imports. Zee Research Group
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A comprehensive gold policy is, therefore, an imperative if mismatch between consumption and production is to be addressed, experts said.
To begin with, they said, India does not have a well laid out definition of 'dore', a semi-pure alloy of gold and silver, usually made at the mining site and transported to a refinery for further purification.
The Finance Bill 2011 said dore with up to 80% gold content can be imported through nominated agencies, but under strict conditions and a complex tax structure.
This is an issue, said Harmesh Arora of the Mumbai-based National Indian Bullion Refinery, seeking freeing up of imports completely.
"The first policy step to take is to allow direct import of dore without technical hindrances. Also, it is extremely important to allow import of dore up to 95% gold content as against the 80% limit," Arora said.
China boosted its gold refining business after it gave companies a single-window clearance along with fiscal and infrastructure incentives, he said. Today, the country produces and refines about 320 tonne of gold annually, the most in the world.
The Centre for Monitoring Indian Economy (CMIE) estimates India's consumption of gold will surge 50% to 1,200 tonne a year by 2020-21.
But the country produced and refined only a minuscule 2.46 tonne worth Rs.312 crore in 2008-09, the latest period for which data are available.
That's less than 1% of the value of metallic mineral production in the country.
Rajesh Khosla, chief executive, MMTC-Pamp, a joint venture refinery between the public sector metals trader and the Swiss major, said there has to be a transparent and simple duty structure in place for imports.
"This is essential to encourage domestic refining. Also, there should be no quibbling over gold content in dore since such prescriptions are not applied anywhere in the world," he said.
To boot, dore with 80% gold content is not available in the international market, Khosla said.
Imports are another problem area. Duty on finished gold stood at Rs.300 per 10 gram, while as it is Rs.140 per 10 gram for dore. In addition, dore has to bear an excise duty of Rs.200 per 10 gram against which a refiner gets countervailing duty benefit.
"The implementation of Cenvatable duty should apply if import is through direct route," Arora said.
Commodity specialist Bhargav Vaidya said freeing gold trade is crucial for both the consumer and the refining business.
"Imports of dore should be allowed directly without any reference to a canalising agency to avail of the Cenvat credit directly," Vaidya said.
In 1997, the government-appointed Committee on Capital Account Convertibility stressed it was essential to liberalise policy on import and export of gold, which, it hoped, would curb smuggling and hoarding.
"There has to be a direct link between consumption and imports, and this can happen only when imports are truly liberalised. Fears of misuse are ill-founded," Khosla said.
Anand James, chief analyst, Geojit Comtrade, said there is also a need to increase the number of importers to ensure that the consumer gets the best deal.
Gold is the third most imported item in India, after petroleum and machinery.
India imported gold worth about Rs.58,705 crore between April 2006 and February 2007, which is more than 11% of the country's total imports by value.
The government collected customs duty worth Rs.2,553.52 crore in the last fiscal from gold imports. Zee Research Group
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