India’s love for gold continues despite rising prices, but the smuggling of the precious metal is a growing problem. The government has implemented measures to curb smuggling and promote the formalisation of the industry to prevent revenue loss and ensure consumer safety.
India has always had a love affair with gold, with the precious metal being an integral part of Indian culture and tradition. However, the impact of rising gold prices and gold smuggling has become a cause for concern for the government and consumers alike.
Rising Gold Prices and Its Impact on Demand
Gold prices have been on the rise in recent years, and this has resulted in a decline in the demand for gold in India. According to the World Gold Council, India consumed 690.4 tonnes of gold in 2020, and this demand is expected to remain strong, with experts predicting consumption of 700 to 800 tonnes of gold in 2021. However, higher gold prices have made consumers more price-sensitive, leading to a decrease in demand.
The rise in gold prices has also led to an increase in the smuggling of metal. The smuggling of gold into India has been a long-standing problem, with the country being one of the largest importers of smuggled gold in the world. According to the Directorate of Revenue Intelligence, approximately 900 kg of gold was seized in 2020, with an estimated value of over INR 270 crore.
Impact of gold smuggling on India’s economy
The impact of gold smuggling on the economy of India is significant. Smuggling results in a loss of revenue for the government, as smugglers evade import duties and taxes. This loss of revenue can have a ripple effect on the economy, as it can impact the government’s ability to fund various developmental projects and initiatives. Furthermore, the smuggling of gold can also have a negative impact on the formal gold industry in India.
The government of India has taken various measures to curb the smuggling of gold into the country. These measures include increasing import duties and taxes on gold, strengthening border security, and launching awareness campaigns to educate consumers on the risks of buying smuggled gold. The government has also launched various initiatives to encourage the formalization of the gold industry, including the introduction of hallmarking standards for gold jewellry.
Hallmarking gold jewellry in India
One of the initiatives launched by the government is the introduction of hallmarking standards for gold jewellery. This initiative is aimed at ensuring the authenticity and quality of gold for consumers. From June 1, 2021, it is mandatory for all gold jewellery sold in India to carry a hallmark certification that confirms the purity of the metal.
Gold continues to be an integral part of Indian culture and tradition, and its demand is expected to remain strong in the coming years. However, the impact of rising gold prices on the demand for gold in India and the issue of gold smuggling cannot be ignored. The government of India must continue to take proactive measures to address these issues, while also promoting the formalisation of the gold industry to ensure the authenticity and quality of gold for consumers. The introduction of hallmarking standards for gold jewellery is a step in the right direction, and it is hoped that this initiative will help in curbing the menace of gold smuggling in India.
