India has emerged as the fourth largest recycler of gold in the world with the country recycling 75 tonnes of gold in 2021, according to a World Gold Council (WGC) report titled ‘Gold refining and recycling’.
China topped the global gold recycling chart as it recycled 168 tonnes of the yellow metal, followed by Italy in the second position with 80 tonnes and the US at the third rank with 78 tonnes in 2021.
According to the WGC report, India’s gold refining capacity increased from 300 tonnes in 2013 to 1,500 tonnes (500%) in 2021. “The gold refining landscape in the country has changed over the last decade, with the number of formal operations increasing from less than five in 2013 to 33 in 2021,” said the report.
The informal sector accounts for as much as 300-500 tonnes of additional refining. It is worth noting though that the scale of unorganised refining has fallen, largely due to the government’s tightening of pollution control regulations.
On the other hand, tax advantages have underpinned the growth of India’s gold refining industry. Gold’s share of overall imports has risen from just 7% in 2013 to around 22% in 2021, the report said.
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“India has the potential to emerge as a competitive refining hub if the next phase of bullion market reforms promotes responsible sourcing, exports of bars and consistent supply of dore or scrap,” said the report.
The domestic recycling market, driven by local rupee prices and economic cycle, is relatively less organised but should gain support from initiatives such as revamped GMS (Gold Monetisation Scheme) as various policy measures to make it attractive to bring surplus gold mainstream and liquidity is enhanced via bullion exchanges, said the report.
Besides, holding periods of jewellery will continue to decline as younger consumers look to change designs more frequently, a trend that could contribute to higher levels of recycling.
“On the other hand, higher incomes following stronger economic growth will reduce outright selling and consumers will find it easier to pledge their gold rather than sell it outright. It is, therefore, necessary to support organised recycling with better incentives and tech-based solutions encompassing the gold supply chain end-to-end,” said the report.
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Despite being the fourth largest recycler in the world, India recycles little of its own stock of gold — about 8% of the global scrap supply. Recycling is driven by current gold price movements, future price expectations and the economic backdrop.