According to the World Gold Council (WGC) report titled ‘Gold refining and recycling,’ India has ranked 4th in global gold recycling in 2021 recycling 75 tonnes, or 6.5 per cent of the total gold recycled across the globe. The report estimates that between 2013 and 2021, India’s gold refining capacity has increased by 1500 tonnes (500%) to 1800 tonnes.
- According to the WGC report, China tops the global gold recycling in 2021 as it recycled 168 tonnes of gold, followed by Italy with 80 tonnes and the United States of America(USA) at 3rd with 78 tonnes.
Refining industry in India:
i.The informal sector in India accounts for as much as an additional 300 to 500 tonnes.
ii.The introduction of Goods and Services Tax (GST) (on 1 July 2017), the impacts of the COVID-19 pandemic and other macro-economic factors have affected the refining profitability, particularly among the small players.
iii.Customs duty on gold doré has also enhanced the growth of the industry.
Role of recycling:
In the past 5 years, around 11% of India’s gold supply has come from “Old Gold”.
Gold recycling in India is driven by the movements in the gold price, future gold price expectations and the wider economic outlook.
India’s gold refining landscape
i.Due to the push toward organised recycling, India’s gold refining landscape has witnessed a significant shift over the past years.
the number of formal operations increasing from less than five in 2013 to 33 in 2021
ii.As a result of this, India’s organised gold refining capacity has surged to an estimated 1,800 tonnes compared to 300t tonnes in 2013. The majority of these refiners have an annual capacity of less than 50 tonnes.
iii.The increase in refining capacity has facilitated a rise in doré shipments from 50 tonnes in 2013 to 276 tonnes in 2018. The import fell in 2020 (159 tonnes) due to COVID-19 and rose to 220 tonnes in 2021.
iv.As a result, gold doré’s share of overall imports has increased from 7% in 2013 to around 22% in 2021.
v.India recycles only a small amount of its own stock of gold. On average, India accounts for around 8% of the global scrap supply.
Outlook:
i.Gold recycling in India is driven by trends in the local rupee gold price and the prevailing economic environment.
ii.The Indian economy is expected to grow in the coming years, the higher income may reduce the outright selling by consumers as the need for distress selling is less.
iii.As non-banking financial companies (NBFCs) expand across rural India, the consumers will find it easier to pledge their gold instead of selling it outright.
iv.This will promote an institutional credit system and discourage selling back gold to raise cash.
About World Gold Council (WGC):
Chair– Randy Smallwood
CEO– David Tait
Headquarters– London, United Kingdom(UK)
