NEW DELHI(BullionStreet): Days after reports said China's gold demand to cross 1,000 tons a year from next year, a WGC official said Indian demand is expected to touch 800 metric tons in 2012.

According to Amresh Acharya, director of investment at World Gold Council's India office,gold demand in the world's largest consumer is expected to rise as much as 23% from a previous estimate of around 650-750 tons.

An estimated shortfall of around 170 tons is seen around this year, analysts said. India imported a record 969 tons in 2011, up from 958 tons in 2010.

He attributed the projected increase to revival in purchases during the festive season and signs of a revival in economic growth. Demand in the July-September period rose by 9% to 223.1 tons, the council said.

Analysts however said Indian demand will boost global and country’s prices further. Prices rose by Rs 25 to set a new record of Rs 32,975 per 10 gm here Tuesday.

Indian government is trying hard to reduce imports by encouraging consumption of paper gold and other gold-backed investment products that don't require physical delivery.

The government has doubled the import tax and recently banned banks from giving loans for gold purchases.

Investors anticipate local prices to rise if the government introduces more measures to restrict imports as it may encourage purchases through unofficial channels.

They also expect that continued global economic uncertainty may push up global prices due to the yellow metal's safe-haven appeal.