Signs of a turnaround as no 3 India gold fund reopens

Over the past year and a half P. Chidambaram, India's finance minister, has been fighting his country's insatiable appetite for gold.

Gold import duties have risen tenfold – from 1% at the start of 2012 to 10% today.

Excise duties now stand at 9% while new rules such as strictly cash only for imports and transaction taxes among other punitive measures have stymied India's gold industry.

Some of the anti-bullion measures are now being lifted.

The $300 million Reliance Gold Savings Fund, India's third largest gold-backed investment fund, will now accept fresh investments again after a 12-week hiatus.

The fund suspended sales in support of the Indian finance ministry's efforts at the beginning of August.

Part of billionaire Anil Ambani's Reliance Capital empire, the fund cited a stronger rupee and a better economic picture as reasons behind the reopening.

India's gold-backed ETF industry is tiny compared to the US and Europe with the 14 funds' assets under management totaling only around $1.7 billion.

But the sub-continents ETF have suffered from the same woes as the large North American funds with outflows of some $200 million this year.

Within the larger context of the Indian gold trade Reliance's move may not be such a big deal, but the reopening of the fund does show some confidence is creeping back into the Indian gold investment market.

Image of Golden Temple in Amritsar, Punjab by Dainis Matisons.