India’s gold business is in trouble: According to a report in Reuters quoted by Gem Konnect, the 10% import duty on gold imports imposed three years ago has led to a rise in smuggling, and many gold refiners are suspending operations as they can’t compete with the illegal gold. Gold importing banks and big jewelers have also been badly hit.
The smuggled gold finds its way to bullion dealers and small jewelers at discounts of up to $100 an ounce below the domestic price – currently at around $1,340 an ounce.
James Jose, secretary of the Association of Gold Refineries and Mints, was quoted as saying, ”Gold refiners have less than a 1% margin. If smugglers offer 4%-5% discounts, then we have no choice but to close our operations.” According to Jose, all 32 refineries in the country have stopped buying in the past few months and are relying on treating scrap gold until market conditions normalise.
