Increased gold smuggling leaves refiners in trouble due to high import duty

Mumbai, Ta. September 23, 2019, Monday

Due to high import duty and increased discounts due to this, the gold refining industry has almost stopped functioning in the refineries which are becoming unsustainable. If the situation remains the same, then the refining business will be shut down by next month.

In the current fiscal year's budget, import duty on gold has been increased from 5% to 8.5% and domestic demand has hit a strong demand for gold.

Gold transactions through unofficial imports or smuggling have become very lucrative at present, market circles said. Since smuggling is being offered at a discount to gold, the official trade has almost subsided.

Bullion refineries have become increasingly difficult to keep up with as the gold has barely gone up. Refiners importing raw or unrefined gold benefit about one per cent as compared to imports of pure gold.

In the last four years, there have been 5 refineries established and these refineries supply about 5 to 6% of the total gold used in the domestic market. Refiners supplied a monthly average of 5 tonnes of gold in the first six months of the year, which dropped to four tonnes in August.