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India ranks fourth in global gold recycling

  • Published
    22nd Jun, 2022
Context

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.

The World Gold Council

  • It is a leading organisation in the gold industry committed to shape the conversation around gold and creating a brighter future for all.
  • The World Gold Council is the market development organisation for the gold industry.
  • Function:
  • It works across all parts of the industry, from gold mining to investment, and their aim is to stimulate and sustain demand for gold.
  • Composition:
  • The World Gold Council is an association whose members comprise the world’s leading gold mining companies. 
  • It helps to support its members to mine in a responsible way and developed the Conflict Free Gold Standard.

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.
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