India plans to encourage refining of locally made coins and bars for traders and investors of precious metals, a government official said, a move that could reduce shipments from overseas sellers.
Domestic refining capacity is very minimal in India and the country mostly depends on supply of scrap and gold ores and dores from overseas mines. Overseas manufacturers such as South Africa's Rand Refinery, Switzerland's PAMP, and Australia's Perth Mint export gold bars and coins to India.
"We want to encourage refining in India... government is with the industry to make it more transparent, efficient and professional," S.K. Goel, special secretary and member of Central Board of Excise and Customs of department of revenue, said late on Friday.
"We are open to any suggestion from industry players, refiners and importers. Government will try to examine and try to implement," Goel added.
The government in its 2010/11 budget has reduced the custom duty on gold ore and concentrate to a flat duty of 140 rupees ($3) per 10 grams from 2 percent on value earlier.
"Let us see how it works... We will have to see its results, how much refining is impacted... Policy is always dynamic and not static," said Goel, when asked if government is considering a cut in duty on gold ores, a raw material used for making of bars and coins.
India imports majority of its 800-900 tonnes of gold requirement from refiners in Switzerland, Australia and South Africa.
"Unless the procedures are set in place for speedy clearance of dore gold imported by refineries at customs stations and at the factory, the cost will be counterproductive for such refinery," said Daman Prakash Rathod, director with MNC Bullion, a wholesaler in southern city of Chennai.
The customs department undertakes tests to verify that the gold content is not more than 80 percent purity, before it is delivered to a refiner. Rathod said it takes three weeks on average to clear the consignment from customs.
The excise duty on refined gold made from imported ore or concentrate was reduced to a specific duty of 280 rupees per 10 grams from earlier 8 percent on value in 2010/11.
The government has increased the import duty on gold to 300 rupees per 10 grams in its 2010/11 budget from 200 rupees earlier.