India should localise gold ore refining to save substantive forex and create employment: Report

NEW DELHI: Establishing gold manufacturing hubs in Special Economic Zones (SEZs), similar to the diamond industry in Surat, could enhance gold processing, attract investments, and create employment opportunities, according to a report by CareEdge.

Despite a 27 per cent rise in gold prices. India saw a 5 per cent increase in consumption to 808.8 tonnes in CY24, according to a report by the World Gold Council.

India faces a significant supply-demand gap in gold, over 80 per cent of India’s gold demand is met by imports. In CY24, it produced only 18 per cent of gold for total consumption

CareEdge report says, India’s gold industry has potential to become a key driver of economic growth. According to Nitu Singh, Associate Director at CareEdge Research, “India’s gold import is estimated to be ~866 tonnes in CY24 which would be more than 8 per cent of total merchandise imports.

By localizing gold ore refining industry, the country would save a substantial amount of forex, would generate employment opportunities and the tax collection for the government.”

The government has taken several steps to boost domestic production and lessen import dependency by establishing gold manufacturing hubs in SEZs and implementing Production Linked Incentive (PLI) schemes for gold ore concentrates under the Aatmanirbhar Bharat initiative.

Recent reforms, like amendments to the Mines and Minerals Act and the introduction of the National Mineral Policy, have opened up the sector for private investment. These initiatives encourage domestic production and increase private sector participation in gold mining and processing.

The government has also revised tax policies to support the industry. In July 2024, customs duty on gold was reduced from 15 per cent to 6 per cent, and on gold ore from 14.35 per cent to 5.35 per cent. This move aims to curb smuggling and strengthen the organized gold market.

On the export front, duty drawback schemes and SEZ incentives have been introduced, though further investments in advanced processing technologies and streamlined export procedures are needed to enhance global competitiveness.

But, despite these reforms, India’s gold ore processing industry faces several challenges. Outdated mining methods, insufficient investment, and regulatory hurdles hinder industry growth.

Lengthy licensing procedures involving 10-15 approvals lead to delays and increased costs. High import taxes and reliance on foreign equipment escalate project expenses. Additionally, inadequate infrastructure in gold-rich remote areas complicates material transportation.

With continued reforms, investment in infrastructure, and incentives for processing and refining, India can build a self-reliant and competitive gold processing sector, unlocking significant economic benefits. (ANI)