Nominating agencies that are responsible for supplying gold to jewellers have failed to meet up the industry's requirement in the south Indian states with supply becoming a major constraint in these smaller regions.
NEW DELHI(BullionStreet): World's largest gold consumer India is likely to witness supply shortages this wedding season, said Gems and Jewellery Export Promotion Council (GJEPC)
South India in particular is going to suffer from acute gold shortage this season as imports are yet to gain momentum after series of anti gold measures taken by the government, it said.
Analysts said major gold centers in South India like Kochi, Thrissur in Kerala and Coimbatore in Tamil Nadu are facing huge shortage of gold. These centres constitute around 15-20 per cent of India’s overall annual demand of the yellow metal.
Other gold jewellery centres including Rajkot, Mumbai, Kolkata and Delhi do not have any shortage of gold availability due to its proximity with nominated agencies and greater marketing and risk management ability.
Last year, India's gold imports hit new records after government nominated banks and large private sector companies to import gold directly.
However, due to unprecedented hike in Current Account Deficit (CAD), government has since then taken series of anti gold policies including hike in import duty to discourage gold's usage.
GJEPC said nominating agencies that are responsible for supplying gold to jewellers have failed to meet up the industry’s requirement in the south Indian states with supply becoming a major constraint in these smaller regions.
Meanwhile, GJEPC has suggested the government allow tax-free import of gold to encourage export of jewellery which consists of around 14 per cent of India’s merchandise exports.
Restrictive measures and a raise in import duty would not reduce gold imports to India, which has been proved by a recent report by the Reserve Bank of India (RBI).
According to RBI’s data on balance of payment, gold imports in the first nine months of the last financial year were reported at $37.8 billion against C Rangarajan-headed Prime Minister’s Economic Advisory Council’s estimates of $36 billion for the full financial year.
The World Gold Council, the global market development body for the gold mining industry, has been maintaining its oft-stated conviction on India’s unabated appetite for the yellow metal.
The global body recently forecast India’s gold import at between 865 and 965 tonnes in 2013, higher than last year’s 864.2 tonnes.