Gold smuggling could increase by 33% to touch 160 tonnes in calendar year 2022 as compared to the pre-Covid period due to import duty hike on gold to 12.5% from 7.5%, according to the World Gold Council (WGC).
However, despite duty hike, inflation and uncertainty, WGC has pegged this year’s gold consumption at 800 tonnes, which is a shade higher than 797 tonnes consumed in 2021.
“In last two years, entry of smuggled gold was not much due to the pandemic situation. But now, since the import duty has gone up and everything is open, chances are that entry of gold through grey route will increase. It may touch 160 tonnes, compared to 120 tonnes during the pre-Covid times,” said Somasundaram PR, regional CEO, India, WGC.
The WGC executive said going into second half of 2022, jewellery demand in India faces downside risks due to uncertainty over the economic outlook, a higher import duty and the possibility of additional curbs on gold buying, even if for temporary and tactical reasons with an eye on INR-USD exchange rate.
“Upside potential for demand can come from expectations of a normal monsoon, higher inflation and the possibility for rangebound prices. Keeping that in mind, our expectation for demand in 2022 is around 800 tonnes, three tonnes more than 2021,” Somasundaram said.
Demand for gold in India for Q2 2022 was at 170.7 tonnes, an increase of 43% as compared to overall Q2 demand for 2021 (119.6 tonnes).