India ranks fourth in global gold recycling

India has emerged as the fourth largest recycler in the world and the country has recycled 75 tonnes in 2021, according to a World Gold Council (WGC) report.

Key highlights of the report

• Top Rankers:
• China topped the global gold recycling chart as it recycled 168 tonnes
• Italy at the second position with 80 tonnes and,
• The US in the third rank with 78 tonnes in 2021.
• The report was titled as 'Gold refining and recycling’.
• India’s stand in the report:
• India's gold refining capacity increased by 1,500 tonnes (500 per cent) 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.
• Due to the government's tightening of pollution regulations, the scale of unorganised refining has fallen.
• Tax advantages have underpinned the growth of India's gold refining industry like the import duty differential.

Significance for India

• 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 the scrap. 
• Gold scrap’s share of overall imports has risen from 7 per cent in 2013 to around 22 per cent in 2021 which is a sign of growth to India’s market.

Advantages for India

• Modernisation and changing scenario: 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.
• Higher incomes and economic growth: Stronger economic growth will reduce outright selling and consumers will find it easier to pledge their gold rather than sell it outright.

Suggestions for India

• Governmental support: The domestic recycling market is relatively less organised but should gain support from initiatives such as revamped GMS (Gold Monetisation Scheme).
• Role of Currency: The various policy measures sync to make it attractive to bring surplus gold mainstream and liquidity is enhanced via bullion exchanges.
• Organised recycling:  It is necessary to support organised recycling with better incentives and tech-based solutions encompassing the gold supply chain end-to-end.

Concerns for India

• Low domestic recycling: India recycles little of its own stock of gold - about 8 per cent of the global scrap supply.
• Economic fluctuations: Recycling is driven by current gold price movements, future price expectations and the economic backdrop.