Post demonetisation: Gold demand drops

The World Gold Council (WGC) has published its latest report on the gold demand in India. The council has stated that despite demonetisation, the country's gold demand would decline to 650-750 tonnes in the current year because of measures adopted by the government to discourage sales of the metal.

India's gold demand would average 850-950 tonnes every year till 2020 due to the transformational changes in the system to curb black money and increase focus on transparency. WGC also reported that about 20 per cent India's demand in 2016 was met by smuggled gold. The smuggled gold came into light in 2013, when the government started raising the import duty on the metal.

Post demonetisation, smuggling had declined sharply. Certain measures were adopted to make the gold trade more transparent, such as the introduction of the goods and services tax (GST), mandatory hallmarking and a push by jewellers to promote non-cash payments.

A lot of physical format of gold lies in different forms at various religious places in the country. The WGC also sought incentives for electronic trade in jewellery and exchange traded funds. The physical and electronic transactions in gold and jewelleries now attract similar tax duties.