Bullion trade

With very little mining and modest levels of recycling, India is heavily reliant on bullion imports to meet its domestic demand. Indian official imports have continued to grow despite high import duty with official imports averaging 760t over the last decade. Doré imports have become an increasingly important part of the gold import landscape in India. With lower duty on gold doré, the share of gold imports has increased from 11% in 2014 to 29% in 2020.1  Higher import duty on bullion has encouraged unofficial imports with the East/North-East and South States acting as the main conduit for unofficial imports into the country. 

Indian official imports

Despite the high import duty, official imports have continued to grow

India is the world’s second largest gold consumer.2 However, the country is heavily dependent on imports to fulfil this demand. Over the five-year period 2016-2020, imports made up 86% of India’s gold supply, while recycling accounted for 13% and mining accounted for just 1%. Higher gold imports can have a negative impact on the country’s balance of trade and have, at times, led the government to implement measures to try to curb gold imports. 

Although the gold market was liberalised in the 1990s, efforts to curb gold imports only began in 2012. In the fiscal year (FY) 2012-13, the Indian economy witnessed a slowdown to 4.5% from 6.7% growth in FY 2011-12, and with it a widening of the current account deficit (CAD) to around 4.8% of GDP from 1.3% in FY 2007-08.3 The authorities partly attributed this to rising gold imports, which had surpassed 900t in 2010. As a result, over a period of just eight months, between January and August 2013, the government raised the import duty on bullion fivefold, from 2% to 10%. 

Later, other stringent regulations governing imports were introduced. One of the key measures taken to restrict imports was the ‘80:20’ rule, under which 20% of all gold imported had to be exported as jewellery. 

While the 80:20 rule was rolled back in November 2014, import duty remained at 10% for nearly eight years before being further increased to 12.5% in July 2019. This was not an isolated move targeting gold, but part of a broader revenue-raising budget: taxes on many imported items, including electronics, increased along with personal income tax – the higher rate of which jumped from 35% to 42.7%. So, rather than being designed specifically to curb gold demand, the increase in duty was part of a wider tax-raising initiative with the objective of improving the government’s fiscal position. In the last Union budget of February 2021, total import duty on a gold bar was reduced to 10.75% – compared with 12.875% before the budget  – in light of the significant increase in the gold price since the previous duty increase.

Since the first duty hike in 2012, India has imported some 6,581t of gold, averaging 730t per annum (Chart 1). There have been several noteworthy developments over this time, including a significant increase in doré shipments and a change in the nature of gold smuggling.5


Chart 1: India’s official gold imports have averaged 730t since the first custom duty hike in 2012

India’s official gold imports have averaged 730t since the first custom duty hike in 2012

Indian official imports from 2010-2020

India’s official gold imports have averaged 730t since the first custom duty hike in 2012
Indian official imports from 2010-2020
Note: Indian official imports in fine gold content terms. Source: IHS Markit, Metals Focus, World Gold Council

Sources: IHS Markit, Metals Focus, World Gold Council; Disclaimer

Note: Indian official imports in fine gold content terms.

Bullion imports

A range of companies can import gold

Even though gold imports are taxed, the regulations are nowhere near as severe as they were during the period of the Gold Control Act.6 Today, three agencies regulate the trade: the Reserve Bank of India (RBI); the Director General of Foreign Trade (DGFT); and the Ministry of Finance. Under current guidelines, banks, nominated agencies (including trading houses) and exporters can import refined gold.7 Banks are authorised by the RBI, whereas nominated agencies and exporters fall under the foreign trade policy (FTP) and hence are licensed by the DGFT. The DGFT also manages doré import licenses.

Aside from the companies named specifically as nominated agencies there are two important groups of importers: Four Star Trading Houses and Five Star Trading Houses.8 Four Star and Five Star Trading Houses are firms that have excelled in international trade and have successfully contributed to the country’s foreign trade. Each are defined by their ‘export performance’: specifically, the value of their exports during the current and previous two financial years. According to the Foreign Trade Policy 2015-2020, Four Star Export Houses should have an export performance of US$500mn in at least two of the previous three years, rising to US$2bn for Five Star Export Houses. 

There are no restrictions on quotas for importing gold into India, provided the necessary duties are paid. There are, however, certain conditions on Four- and Five-Star Trading houses with a nominated agency certificate; these were introduced by the DGFT in October 2017. Under the restrictions, the import of gold by Four Star and Five Star  Trading Houses is subject to “actual user condition” meaning they can only import gold for their own use and are permitted to import gold as input solely for the purposes of manufacture and export by themselves during the remaining validity period of the nominated agency certificate. 9 The restrictions on gold imports by Star Trading Houses were intended to streamline bullion imports and check round tripping.10 There have also been other regulations that have impacted the bullion industry in the last five years (Table 1). 

Table 1: Regulations for Indian bullion industry between 2017-2020


Notification dateComments
August 14, 2017Ban on export of medallions and coins above 22k
August 25, 2017Import of gold coins and medallions from South Korea restricted
October 18, 2017No nominated agency certificate to be issued/renewed for Four Star and Five Star exporters and the import of gold by Four Star and Five Star exporters is subjected to actual user condition
September 26, 2019Advance Authorisation shall not be issued for gold coins and medallions export. Advance Authorisation Scheme allows duty free imports of bullion which are meant for exports
December 18, 2019Import of gold doré and bullion moved to restrictive list and import is allowed through nominated agencies as notified by RBI (in case of banks) and DGFT (for other agencies). However, import under Advance Authorisation and supply of gold directly by the foreign buyers to exporters against export orders are exempted.
February 1, 2020Tax Collected at Source (TCS) of 0.1% on sale of goods above Rs 5mn in a year by a seller whose turnover exceeds Rs 100mn

Source: Department of Commerce, Ministry of Finance, World Gold Council

Currently, 16 banks, five nominated agencies, six trading houses and various exporters whose export performance matches the government’s threshold limits for Five Star and Four Star Trading Houses, are allowed to import gold (Table 2).11 The banks usually import gold on a consignment basis, while trading houses and nominated agencies do so on a direct payment basis.12

Table 2: Companies importing gold in India


BanksNominated agencies/trading Houses
Axis BankMetals and Minerals Trading Corporation Ltd (MMTC)
Punjab National Bank Handicraft and Handloom Export Corporation (HHEC)
Union Bank of IndiaState Trading Corporation (STC)
Bank of BarodaProject and Equipment Corporation of India Ltd (PEC)
Bank of IndiaDiamond India Limited (DIL)
Federal Bank Ltd EOU and SEZ gems and jewellery units, for their own consumption 
HDFC Bank LtdFive Star Trading Houses (only for self use)
ICICI Bank LtdFour Star Trading Houses (only for self use) 
Indian Overseas Bank
IndusInd Bank Ltd
Industrial and Commercial Bank of China
Kotak Mahindra Bank
Karur Vyasa Bank
RBL Bank
Yes Bank Ltd
State Bank of India 

Source: RBI, World Gold Council

Gold trading volumes

The gold market is large, global and highly liquid. Gold’s average daily trading volume was US$183bn in 2020.13 Over-the-counter (OTC) trading and trading on exchanges constitute the majority of gold trading volumes. Trading on exchanges is more transparent than bilateral trading on the OTC market. Trading on the OTC market can be opaque and affects price discovery. In 2020, the average daily trading volumes on futures and spot exchanges was US$69.3bn, with gold ETFs generating average trading volumes of US$3.3bn (Chart 2). India’s contribution to these totals was just US$1.2bn and US$3.4mn respectively.14 Bilateral trading on the OTC market, however, is far more opaque and with estimated daily trading volumes of US$110.4bn, can affect price discovery. 


Chart 2: Gold is liquid across key investment platforms

Gold is liquid across key investment platforms

Average daily trading volumes of gold in 2020, US$bn

Gold is liquid across key investment platforms
Average daily trading volumes of gold in 2020, US$bn
* Average daily trading volumes from 1 January 2020 to 31 December 2020. Source: Bloomberg, Nasdaq, World Gold Council

Sources: Bloomberg, Nasdaq, World Gold Council; Disclaimer

* Average daily trading volumes from 1 January 2020 to 31 December 2020.

Gold doré imports

Doré imports have become an increasingly important part of the gold import landscape 

One important change that has taken place in India’s gold market is the growth in gold doré imports. The increase in doré imports reflects the government’s accommodative stance towards gold refining. Before the Union budget of 2016, the duty differential between refined gold and gold doré was 1- 2%, which often allowed Indian refineries to pay considerable premiums to miners for doré imports.15  Post the July 2019 budget, the duty differential reduced to 0.65% between refined gold and doré imports. And in the latest Union budget of February 2021 the duty differential between refined gold and doré imports has increased slightly to 0.66%, with refined gold taxed at 10.75% and doré taxed at 10.09%. As a result of duty benefit, doré imports increased from a mere 21t in 2012 to 276t in 2018.16 Doré imports fell to 212t in 2019 due to a combination of slowing demand and the domestic market trading at a discount (for a considerable period), which at times made it unprofitable for refineries to import doré.

The duty benefits also led to a massive expansion of refining capacity in India, with the number of refineries growing from three in 2012 to 32 in 2020.17 In the last five years, gold doré imports made up 30% of total official gold imports (Chart 3). Currently, some 25-26 refineries are active18, with a combined refining capacity of 1,200-1,400t.19 Of these, 23 refineries imported doré in 2020 and the top five refineries accounted for more than 70% of India’s doré imports. 


Chart 3: Gold doré made up 30% of total imports in the last five years

Gold doré made up 30% of total imports in the last five years

Indian imports by bullion and gold doré from 2010-2020

Gold doré made up 30% of total imports in the last five years
Indian imports by bullion and gold doré from 2010-2020
Source: IHS Markit, Metals Focus, World Gold Council

Sources: IHS Markit, Metals Focus, World Gold Council; Disclaimer

Limited availability and competition are key roadblocks to sourcing gold doré 

According to Metals Focus, in 2018, globally, only around 1,565t of gold doré was available on the open market for export and refining, well below what was needed to satisfy demand. Of the total global gold mine production of 3,505t, some 85% was recovered to account for 2,980t of gold doré. But an important share of global doré can be defined as captive – it does not reach the international market. This covers doré mined in China (404t), Russia (297t), South Africa (130t), and Ontario in Canada (120t).20 With another 465t of gold production as a by-product and from concentrates, this leaves around 1,565t of doré on the open market; significantly less than 2018’s global mine supply total.

The second challenge facing Indian refineries concerns the growing competition in sourcing this limited amount of doré. Global refining capacity has grown in recent years through a combination of new plants and upgrading of existing installations. And global recycling has declined sharply, from a record total of 1,629t in 2012 to 1,283t in 2020. Competition for doré is fierce.

Duty benefits and increasing exports from South America have mitigated the challenges of sourcing gold doré 

The duty advantage on gold doré has helped Indian refineries to pay premia for gold doré to the miners and compete with other global refineries on aggressive terms. Indian refineries have also been able to form a strong relationship with gold doré exporting countries in South America, such as Peru and Bolivia, and set up offices in these countries. The increasing exports from these countries have helped to meet the doré demand from refineries in India. 

Responsible sourcing of gold doré and India Good Delivery Standards will facilitate growth in the Indian refinery industry

As part of the global Financial Action Task Force (FATF), India is obliged to follow responsible sourcing. Good progress is already underway on this front. The country’s only LBMA-accredited refinery processes ~45-50% of gold doré imports and the wider gold industry is working closely with OECD to develop due diligence audit systems and rules for sourcing gold doré aligned to OECD’s guidance. Also, the local exchanges, including the Multi Commodity Exchange of India (MCX), the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), have issued guidelines for India Good Delivery Standards whereby they will accept bullion bars produced by the Bureau of Indian Standards (BIS) accredited domestic refineries against settlement of gold futures contracts. Responsible sourcing and India Good Delivery Standards will facilitate the growth of Indian refiners. Also, with the set-up of bullion banking in India, India Good Delivery bars will be accepted by banks and the domestic gold spot exchange in India. With these developments, Indian refiners will play a more prominent role in the gold industry rather than relying on duty differentials. 

Official import trends

Banks cede market share to refiners and nominated agencies

There have been some interesting changes in the share of importers and origin of imports over the last five years. The banks’ share of official imports shrunk from 40% in 2017 to 19% in 2020 as the business shifted to refineries. There are two main reasons for this shift: bullion banks like Nova Scotia exited their precious metals business; and many large bullion dealers, previously clients of the banks, set up their own refineries.

As doré imports have grown, refineries have become far more prominent importers, achieving a 29% share of India’s official imports in 2020.21 Imports into the Sri City Free Trade Warehousing Zone (FTWZ) made up a further 29% of imports in 2020. These imports landed in FTWZ to avoid delays, thanks to automated custom assessment in the clearance of imports, and to take advantage of custom duty available on imports.22 Nominated agencies and exporters made up 23% of official imports in 2020 (Chart 4). 


Chart 4: Refineries and Sri City FTWZ accounted for the majority of imports in 2020

Refineries and Sri City FTWZ accounted for the majority of imports in 2020

Indian imports by category of importers in 2020

Refineries and Sri City FTWZ accounted for the majority of imports in 2020
Indian imports by category of importers in 2020
Source: IHS Markit, Metals Focus, World Gold Council

Sources: IHS Markit, Metals Focus, World Gold Council; Disclaimer

In 2020, India imported 377t of gold bars and doré from over 30 countries. 55% of the imports came from just two countries – Switzerland (44%) and the UAE (11%). The ramp-up in doré imports has seen new countries emerge as suppliers of gold to India, including Peru, Bolivia and the Dominican Republic (Chart 5).


Chart 5: Switzerland is the largest gold exporter to India

Switzerland is the largest gold exporter to India

Top gold exporting countries to India from 2015-2020

Switzerland is the largest gold exporter to India
Top gold exporting countries to India from 2015-2020
Source: IHS Markit, Metals Focus, World Gold Council

Sources: IHS Markit, Metals Focus, World Gold Council; Disclaimer

Some two-thirds of imported gold is in the form of 995 cast kilobars or 100g bars. 999 purity bars account for much of the remaining one-third of imports. Over the last few years, 100g bars have gained in popularity, with increased demand from small dealers or manufacturers. 

Gold value chain

Value chain as diverse as the country

India’s gold value chain is multi-faceted. It varies both by segment and by the size of the company involved. Put simply, large participants are more likely to be vertically integrated. There can also be considerable overlap between various value chains, an example of which would be retailers selling both jewellery and investment products. For example, a bullion dealer would not sell jewellery and there are some retailers who do not sell bars and coins as margins are lower and they involve high capital blockage.

Given the dependence on imports, the first link in the value chain covers gold imports. This segment is represented by banks, trading houses and refineries. Once the gold is imported it is sold either to a bullion dealer, a manufacturer or a retailer, depending on the size of the transaction. Importantly, only sizeable players buy gold directly from the banks, who in turn sell the bullion to smaller dealers.

The fact that gold importers are few and often restricted to large cities, means that bullion dealers form an important link between importers and consumers. There are three distinct layers of bullion dealers in India:

  • First level bullion traders: There are 8-10 very large bullion dealers in metro and tier-1 cities who buy gold directly from the importer. They work with local refineries who convert the imported kilobars into 100g bars
  • Second level bullion dealers: The 100g bars are sold to around 30-50 medium-sized dealers in tier-2 and tier-3 cities, and jewellery manufacturers. These bullion dealers work with local refineries to convert 100g bars into small denomination bars of 50g or 10g 
  • Third level bullion dealers: Small manufacturers and retailers buy gold from the third level bullion dealers located in semi-urban and rural areas who tend to sell 50g and 10g bars bought from medium-sized dealers. 

The bullion business also changed significantly after Goods and Services Tax (GST) was introduced (Focus 1).

Bullion dealers are an important link in meeting investor requirements. Larger dealers mint their own coins and bars, which are sold locally via a network of smaller bullion dealers; this gold is sourced from importers and local refineries. The latter also mint their own coins, which are sold to bullion dealers for onward distribution.

The other important layer in the value chain consists of participants that work with the jewellery trade. Both large manufacturers and retailers tend to buy gold from importers. Retailers such as Tanishq, Malabar, Kalyan, Joyalukkas and Senco often buy gold from banks or nominated agencies, whereas medium-sized, regional jewellery retailers purchase directly from refineries and large bullion dealers. Finally, small retailers and manufacturers tend to buy from medium-sized bullion dealers (Figure 1).

Bullion banking in India

Bullion banking is a catalyst for change in India’s gold market landscape

India is the second largest consumer of gold in the world, but the Indian gold market faces multiple challenges, such as a lack of quality assurance, the unorganised state of the market and a lack of trust in international markets. Bullion banking is one of the key pillars to address these challenges and help establish India’s position among leading global and regional markets. However, India will need to address a few developmental roadblocks in building a bullion banking ecosystem; namely, regulatory restrictions, lack of infrastructure and limited bullion banking expertise. The local gold industry is working with the government on a broad set of reforms to address India’s gold market challenges; with regulatory support from the government India can build a successful bullion banking industry. An effective bullion banking industry could transform India’s gold market through:

  • Greater access to the bullion market for banks and other financial institutions: Banks could have greater access to the bullion market, including gold spot and derivatives trading. Banks could be encouraged to pursue product innovation and attract retail participation in the bullion market. With bullion banking, insurance companies could offer gold and gold futures products to customers
  • Boosting essential policy reforms: Bullion banks can make a meaningful contribution to other gold-related reforms:
    • They can boost participation in the gold spot exchange by acting as clearing and trading members, and liquidity providers 
    • They can boost participation in the gold monetisation scheme through increased mobilisation of gold from the public 
    • They can help establish the assaying infrastructure that is a prerequisite for an organised gold market 
  • Increased liquidity for bullion trade: The set-up of bullion banking could increase liquidity for bullion trade through:
    • Inter-bank lending and borrowing in both the local and the global bullion markets
    • Central bank lending bullion to commercial banks and other entities.

The timing of bullion banking reform in India could not be more propitious. The Indian gold spot exchange is expected to launch in the near future – a key moment in the development and formalisation of the domestic gold market. India would reap significant benefits, both within its gold market and across the wider economy, if it were able to build a robust bullion banking industry.

The implementation of the Goods and Services Tax (GST) in India during 2017 was one of the biggest tax reforms India has seen. The GST regime has transformed the Indian economy into a digital and standardised one, which in turn has helped to create a seamless information flow and a common dataset – available both centrally and to the States – and has made direct and indirect tax collections more efficient. The objective of GST is to remove the imperfections prevalent in indirect taxes and improve tax compliance. In effect, it mitigates the tax-cascading effect for the consumer, which had increased cost.

To provide some context, the GST subsumed most national and local taxes into one single tax rate applicable across India. Before GST, gold attracted 10% custom duty, 1% excise duty and 1-5% Value Added Tax (VAT), depending on the State; the highest being 5% VAT in the State of Kerala. In 2017, the GST for gold was fixed at 3% (replacing the excise duty and VAT), while the 10.75% import duty on gold remains.

Along with simplifying the tax structure for all industries, it also brought around a profound shift in the operations of bullion dealers across much of the country and effectively led to consolidation in the industry where large and organised players have benefitted at the expense of small and unorganised bullion dealers.

To explain this in detail, traditionally, apart from the large bullion dealers, smaller entities were scattered across India, catering to local jewellers. Before the GST came into effect, bullion dealers wanting to sell in different States needed to obtain a VAT registration for each and bear an         
irrecoverable central government sales tax. Some States like Maharashtra charged a stamp duty, while States like Kerala had an entry tax. As a result, large bullion dealers in some States restricted themselves to working in their locality as they could not compete with local dealers due to tax differentials. 

Additionally, jewellers in some States had to pay a 1% entry tax if they brought in jewellery fabricated elsewhere. As a result, small regional jewellers preferred to buy bullion from local players, which would then be fabricated within the State. This helped avert the 1% tax and thus benefitted margins. This in turn led to an increase in the number of regional bullion hubs. Further to this, jewellery bought from another State also attracted Octroi (a city entry tax levied by a few States) and regular border checks, making it risky and often time consuming to transport inter-State. Importantly under the pre-GST regime, tax paid in one State could not be offset against tax paid elsewhere. Now, under GST, this is no longer the case as bullion dealers can claim input tax credit, which lends itself to increased cross-State flows and transactions.

Now, with GST, the tax advantages that helped local bullion dealers have diminished and smaller players are unable to compete on price. The pricing power now sits with refineries and bigger bullion dealers who are able to deal directly with buyers across any State. Naturally, this has led to consolidation in the industry and large players have gained market share.

Surendra Mehta
National Secretary
Indian Bullion and Jewellers Association Ltd

Key import locations

Gold officially shipped into India comes via air into 11 cities. In addition to these cities, gold is also imported in Sri City FTWZ, located in the town of Satyavedu in the State of Andhra Pradesh. These airports are near to key manufacturing and trading hubs, namely: 

  • North: New Delhi, Jaipur 
  • West: Mumbai, Ahmedabad
  • South: Bengaluru, Chennai, Cochin, Coimbatore, Hyderabad, Trivandrum, Sri City FTWZ
  • East: Kolkata 

In 2020, 84% of imports came through airports located in North and South India, with the remaining 16% coming through airports in West and East India (Chart 6).


Chart 6: 84% of official imports came through airports located in North and South India

84% of official imports came through airports located in North and South India

Imports in 2020 by airports

84% of official imports came through airports located in North and South India
Imports in 2020 by airports
Source: IHS Markit, Metals Focus, World Gold Council

Sources: IHS Markit, Metals Focus, World Gold Council; Disclaimer

Unofficial imports

Bullion import regulations have, at times, encouraged unofficial flows into India

There is a long history of unofficial flows of gold into India. During the Gold Control period between 1960 and 1990 gold was largely smuggled into India, typically arriving by sea from the western part of Asia (including the Middle East) and the CIS. The gold landed in Maharashtra, Gujarat and some parts of southern India. After the Gold Control Act was abolished in 1990 these unofficial flows effectively disappeared, until the increase in the import duty in 2012 helped revive the smuggling trade.

The dynamics of the unofficial trade have changed during the last five years. Structural changes, including demonetisation and the introduction of GST, led to a drop in unofficial flows from 119t in 2015 to 100t in 2018.  Smuggling then recovered to 117t in 2019 as the duty hike provided a renewed incentive to buy gold unofficially, before collapsing to 22.3t as COVID-19 hit in 2020 (Table 3).

Table 3: Unofficial bullion imports in India (tonnes)



Source: Metals Focus, World Gold Council

In recent years, gold smuggling has shifted away from the sea in favour of air and land routes. Two key reasons for this are increasing vigilance across India’s 7,517km coastline, and the impact of gold price volatility, given the time taken to deliver seaborne freight to its destination (as the smuggler often bears the price risk).

Previously, the western borders and coastlines of India provided a major entry point for smuggled gold. However, greater vigilance in policing these borders has shifted flows towards the East and North-East. Around 70-80% of gold smuggled into India lands in the East/North-East and South States:24

  • East and North-East States: By volume, 40-45% of smuggled gold lands in the States of West Bengal, Manipur and Mizoram, the majority of which comes from Bangladesh, Myanmar and China. The growth of smuggling through these routes is due to a combination of:
    • The liberal trade policies of India’s eastern neighbours, e.g., Myanmar, which removed the prohibition of gold exports in 2018
    • The introduction of the Free Movement Regime between India and Myanmar in 2018, which allows for ease of cross-border travel
    • The unorganised nature of smuggling operations in the East and the North-East has created a lower barrier to entry than exists in South India
  • South States: The Southern States of Kerala, Tamilnadu, Andhra Pradesh and Telangana account for 30-35% of India’s smuggled gold by volume. Gold smuggled into these States comes from the UAE and South East Asia
  • Rest of India: The remainder of India contributes 20-30% of the smuggled volume of gold, and this is mainly sourced from the UAE.

A variety of routes are used to smuggle gold into India. The majority – around 65–75% – comes in by air, around 20–25% by sea, and 5–10% by land.25 Smuggling is usually carried out by low-income workers returning home; they receive carrier fees as well as a sponsored air ticket. Smuggling via land or sea routes tends to occur through the relatively porous borders that India shares with its neighbours, notably Myanmar, Nepal, Bangladesh and Sri Lanka.


Imports will remain the critical source of supply to India’s gold market for many years. Banks will continue to face competition from refineries in their overall market share for official imports in India. Measures such as a ban on the export of gold medallions above 22k and conditions imposed on gold imports by Four Star and Five Star Trading Houses will streamline bullion imports. In the short term, lower custom duty on gold may boost consumer demand and curb unofficial imports. 

Looking ahead, banks and refineries may be allowed to export bullion in the future and Indian bullion imports may flow through the international gold spot exchange (IIBX), moving away from the current consignment model for bullion imports in India. 

The outlook for doré imports is promising but with headwinds. Indian refineries already face challenges in sourcing doré, but duty benefits and increasing exports from South America have mitigated the risk of sourcing gold doré to some extent. Responsible sourcing of gold doré and India Good Delivery Standards look set to enable growth within the Indian refinery industry.  


We commissioned Metals Focus, one of the world’s leading precious metals consultancies, to conduct this independent research study with the help of their ‘on the ground’ presence in India. With a team spread across nine countries, Metals Focus is dedicated to providing world-class statistics, analysis and forecasts to the global precious metals market. We are extremely thankful to Chirag Sheth and Harshal Barot from Metals Focus for their contributions to this report.

Chirag Sheth is a principal consultant with Metals Focus and based in the Mumbai office. Chirag analyses the precious metals market of South Asia, as well as Indonesia, Thailand and Vietnam. He has over 13 years’ experience in precious metals trading and research work for UBS and Latin Manharlal Commodities. He is also a visiting faculty to management institutes and features on business news channels in India. 

Harshal Barot is a senior consultant with Metals Focus, also based in the Mumbai office. He has a decade’s experience as a precious metals analyst and is a regular contributor to Metals Focus work on prices and macroeconomics. Harshal is also jointly responsible for Metals Focus’ precious metals research and analyses other South Asia markets, focusing on Sri Lanka and Nepal. 


1In fine gold content terms.

2India’s average consumer demand (sum of jewellery consumption and total bar and coin investment) over the last decade was 787t; the second highest over the past decade after China at 938t.

3Fiscal year (FY) is from April to March.

4Total import duty on bullion post the budget of February 2021 includes 7.5% Basic Customs Duty (BCD), 2.5% Agriculture and Infrastructure Cess (AIDC) and 0.75% Social Welfare Surcharge (SWS). Custom duty on gold bars was increased from 10% to 12.5% in the Union budget 2019-20 and was effective from 6 July 2019. The domestic gold spot price, as measured by the MCX Gold Spot had increased by 42% during the period 5 July 2019 to 31 January 2021.

5In 2016 the Indian gold market was shut for 42 days due to protests against 1% excise duty on jewellery manufacturing. In 2020 official imports were hammered due to the impact of the coronavirus. In recent years, gold smuggling has shifted away from the sea in favour of air and land routes.

6The Gold Control Rules were promulgated in 1963 and the final provisions were enacted under the Gold Control Act 1968 whereby several restraints were placed on gold businesses including limits on individual and family holdings of gold. These restrictive measures lasted until 1989.

7A nominated agency status is provided by the Ministry of Commerce via DGFT notification to import bullion in India.

8Four Star Trading Houses and Five Star Trading Houses are import and export houses, some of which are also manufacturers. All exporters of goods, services and technology with an import-export code (IEC) are eligible for recognition as a Four Star and Five Star Trading Houses

9Goods that are importable freely without any ‘restriction’ may be imported by any person. However, if such imports require an authorisation, the actual user alone may import such good(s) unless the actual user condition is specifically dispensed with by DGFT.

10Round tripping is the act of exporting gold, be it jewellery, bars or coins, with the sole purpose of melting it down before re-importing it back to the original exporting country. The underlying motive behind round tripping varies. It can be to arbitrage between differences in tax rates or exploit loopholes. Few Star Trading Houses exported medallions without following the value addition norms, hence inflating their export value, in order to retain their status of Four Star and Five Star Trading Houses.

11RBI Notification dated 15.04.2020.

12 Trade on a consignment basis involves payment being made to the exporter only once the imported goods have been sold to the local customer. The exporter remains the owner of the goods until they have been sold.

13Gold trading volumes on Goldhub.com.

14Multi Commodity Exchange of India and Association of Mutual Funds in India.

15The duty differential between custom duty on refined gold and gold doré imports in Domestic Tariff Area (DTA) and Excise Free Zone (EFZ) was 1% and 2% respectively.

16Metals Focus, Indian Customs.

17Metals Focus.

18Metals Focus.

19Metals Focus.

20Metals Focus, Gold Focus 2019.

21Metals Focus, official imports in fine gold content terms.

22FTWZ offers a distinct advantage as overseas suppliers can import gold into the custom-bonded warehouse of FTWZ without paying customs duty for authorised operations. Imported gold can be stored in FTWZ for a long period – as long as the letter of approval (LOA) is valid – thus reducing the logistics time in supplying to the domestic market as compared to importing from the overseas market.

23Metals Focus

24Deloitte Study, World Gold Council

25Metals Focus

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All references to LBMA Gold Price are used with the permission of ICE Benchmark Administration Limited and have been provided for informational purposes only. ICE Benchmark Administration Limited accepts no liability or responsibility for the accuracy of the prices or the underlying product to which the prices may be referenced. Other content is the intellectual property of the respective third party and all rights are reserved to them. 

Reproduction or redistribution of any of this information is expressly prohibited without the prior written consent of World Gold Council or the appropriate copyright owners, except as specifically provided below. Information and statistics are copyright © and/or other intellectual property of the World Gold Council or its affiliates (collectively, “WGC”) or third-party providers identified herein. All rights of the respective owners are reserved.

The use of the statistics in this information is permitted for the purposes of review and commentary (including media commentary) in line with fair industry practice, subject to the following two pre-conditions: (i) only limited extracts of data or analysis be used; and (ii) any and all use of these statistics is accompanied by a citation to World Gold Council and, where appropriate, to Metals Focus, Refinitiv GFMS or other identified copyright owners as their source. World Gold Council is affiliated with Metals Focus.

WGC does not guarantee the accuracy or completeness of any information nor accepts responsibility for any losses or damages arising directly or indirectly from the use of this information. This information is for educational purposes only and by receiving this information, you agree with its intended purpose. Nothing contained herein is intended to constitute a recommendation, investment advice, or offer for the purchase or sale of gold, any gold-related products or services or any other products, services, securities or financial instruments (collectively, “Services”). This information does not take into account any investment objectives, financial situation or particular needs of any particular person. 

Diversification does not guarantee any investment returns and does not eliminate the risk of loss. The resulting performance of various investment outcomes that can be generated through allocation to gold are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. WGC does not guarantee or warranty any calculations and models used in any hypothetical portfolios or any outcomes resulting from any such use. Investors should discuss their individual circumstances with their appropriate investment professionals before making any decision regarding any Services or investments.

This information contains forward-looking statements, such as statements which use the words “believes”, “expects”, “may”, or “suggests”, or similar terminology, which are based on current expectations and are subject to change. Forward-looking statements involve a number of risks and uncertainties. There can be no assurance that any forward-looking statements will be achieved. WGC assumes no responsibility for updating any forward-looking statements.

Information regarding QaurumSM and the Gold Valuation Framework

Note that the resulting performance of various investment outcomes that can generated through use of Qaurum, the Gold Valuation Framework and other information are hypothetical in nature, may not reflect actual investment results and are not guarantees of future results. WGC provides no warranty or guarantee regarding the functionality of the tool, including without limitation any projections, estimates or calculations.