Domestic Gold Production Could Save $1.2 Bn In Foreign Exchange: Report

As India takes steps to strengthen its gold processing and manufacturing industry, domestic gold production could save USD 1.2 billion In foreign exchange, according to a recent report by the PHD Chamber of Commerce and Industry (PHDCCI). Notably, in the country, gold consumption has grown by 7 per cent over the past five years, reaching 777 tonne in 2023. Despite having significant gold reserves, India's domestic production remains very low, meeting only 2 per cent of its demand.

Indian gold processing and manufacturing industry is poised for substantial growth and transformation and is expected to create 25,000 new jobs and Rs 15,000 crore investments by 2030. This increased investments will enhance employment from the current level of 3,000 to 25,000 workers, according to a study by PHD Research Bureau, PHDCCI. 

“India's recent surge in gold demand reflects its pivotal role in the country's economic landscape. Despite India's historical association with gold mining, much of the demand is met through imports, highlighting the need to leverage domestic resources to meet the burgeoning demand,"  Sanjeev Agrawal President, of PHDCCI, stated.

The report highlights by citing China as an example which produces 40 per cent of its gold demand domestically, the need for India to develop its domestic processing and manufacturing capabilities. To achieve this, the Indian government has implemented initiatives such as the Gold Monetisation Scheme and amendments to the Mines and Minerals Development and Regulation Act.

The report recommends maintaining custom duties on gold ore and concentrates, improving ease of doing business, and providing import duty benefits on machinery to boost the growth of the industry. By 2030, the Indian gold processing and manufacturing industry is expected to grow substantially, with the total gold supply increasing to 1,000 tonnes, driven by a 2.4 per cent annual growth rate. This shift is expected to enhance economic self-sufficiency, contribute to GDP as well as generate substantial employment opportunities.

On this Vice President of PHDCCI Rajeev Juneja said “The first quarter of 2024 has sustained this upward trajectory, witnessing heightened demand across jewellery, investment in bullion and coins, and Exchange-Traded Products (ETPs). Given the growing demand, there is a need to boost gold production by incentivizing the existing players and attracting new industries to the gold industry.

The report also notes that enhancing domestic gold production could save over USD 1.2 billion in foreign exchange by 2030, improving the trade balance. With the Indian government's support and the industry's growth potential, India is poised to become a significant player in the global gold market, reducing its reliance on imports and increasing its self-reliance.