Indians importing more gold jewellery despite higher duty
India's wedding season is in full swing and gold traders are finding it hard to keep up.
Eager to meet demand, jewellers have sparked a boost in jewellery imports, as opposed to gold bars.
India has the world's largest appetite for gold and the country's wedding season is one of the biggest drivers of global demand for the precious metal.
But this year, India's central bank has spoiled the party: Aside from record high import duties on the yellow metal, the Reserve Bank of India also requires importers to set aside 20% of imported gold for export purposes.
The 80:20 scheme appears to have helped: According to one estimate, imports will fall 40% this year.
But this hasn't done much to curb demand, and Indian traders aren't keen on turning away customers.
According to the Hindu Business Line, gold jewellery imports have picked up in recent weeks. It seems that traders are choosing to import gold in this form rather than in bullion bars because jewellery is not subject to the 80:20 rule – but it does have a higher import duty.
"It is easy for jewellers to import, melt and then make into jewellery according to the taste of Indian buyers. Jewellers said the high premium on bullion makes jewellery imports viable even at higher duty," The Hindu Business Line writes.
Traders have also been finding more creative ways to get gold into the country. As reported by MINING.com earlier this week, traders have taken to paying the airfare of non-residents to fly to India if they'll bring gold with them.
Gold smuggling is also on the rise and there have been many reported cases of gold being hidden in airplane toilets.
Gold's allure may be fading among investors, but in India, gold is still king.