| Evolution
of Modern Gold Market in India |
The introduction of a modern
gold market in India:
1990 Abolition of
the long-standing Gold Control Act, which had forbidden the holding of 'primary'
or bar gold except by authorised dealers and goldsmiths and sought to limit jewellery
holdings of families.
Imports were then permitted
in three stages.
1992 Non-Resident
Indians (NRIs) on a visit to India were each allowed to bring in up to 5 kilos
(160.7 oz) on payment of a small duty of six per cent. This allocation was raised
to 10 kilos in 1997.
1994 Gold dealers
could bid for a Special Import Licence (SIL) which was issued for a variety of
luxury imports.
1997 Open General
Licence (OGL) was introduced, paving the way for substantial direct imports by
local banks from the international market, thus partly eliminating the regional
supplies from Dubai, Singapore
and Hong Kong.
The OGL system has also
largely eclipsed imports by NRIs and SILs. Additionally, significant temporary
imports are permitted under an Export Replenishment scheme for jewellery manufacturers
working for export in designated special zones.
2001 GFMS data show the breakdown
of official imports as:
| |
Tonnes |
Million Ounces |
| NRI
& SIL |
3 |
0.1 |
| OGL |
599 |
19.25 |
| Export
Replenish |
52 |
1.67 |
| Total
Official |
654 |
21.03 |
In 2001 unofficial imports
fell because of a reduction in import duties, pushing down the local premium
and making smuggling less profitable. Ten tola
bars are still the preferred form of gold in India, accounting for 95% of imports.
The Bombay
Bullion Association, founded in 1948, was the main forum pushing the government
for modernisation of the market. It publishes a monthly bullion bulletin.
See Also: India
Markets Introduction;
Gold
Investment in India