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Singapore, Bangkok may be new gold trade centres
Published on 30 Aug. 2009 11:34 PM IST
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A tectonic shift in global gold markets looks imminent, with the world’s top two traditional centres of gold, Switzerland and Dubai, set to make way for the South East Asian hubs of Singapore and Bangkok. The reason: the recent India-Asean free trade agreement, which could make it cheaper for India to source gold from these two countries. India being the world’s biggest gold consuming country in the world, any change in its sourcing pattern will easily change the market dynamics. The pact signed by India with the 10-nation Asean trade bloc entails zero duty on most gold products to be imported from Asean nations from 2013 onwards. It’s a concession India has not given to any other gold producing country as yet, a Sunday ET analysis based on inputs from the ministry of commerce and industry has revealed. According to data available from April 2008 to February 2009, India imported gold worth $9.1bn from Switzerland and $2.9bn from Dubai against a meagre $30mn from Singapore and Thailand combined. India imported $2.1bn worth of gold from South Africa during the period, making it the only other country which exports a sizeable amount of gold to India. A commerce ministry official said it was logical that Singapore would emerge as a major gold market catering to the Indian market as it would enjoy zero duty on most gold, diamond and pearl items that it exports to India once the India-Asean pact is implemented. “Among the Asean countries, Singapore and Thailand, which already have an export base catering to Indian consumers, will benefit the most,” the official said on the condition of anonymity. According to India-Asean FTA, various forms of gold, including monetary gold, non-monetary powder of gold and non-monetary unwrought gold, all of which currently attract 10% duty, will have zero duty from 2013. World Gold Council’s Indian subcontinent MD Ajay Mitra said that the withdrawal of 10% duty as a result of the India-Asean FTA would benefit consumers. “After all, the variety on offer will widen and the retail trade margins will improve as the pricing mechanism is on MRP basis,” he said. He, however, did not expect a “substantial” reduction as freight and cost of production would still be higher. Gems & Jewellery Export Promotion Council vice-chairman Rajiv Jain, however, said that Singapore would benefit out of the pact, but “it still does not have huge production base to cater to the Indian gold market”. A 10% drop in duty will give a major edge to Singapore and Thailand, which may increase gold production. Currently, out of the total gold imports of two major categories of gold, monetary gold (gold bar for RBI) and non-monetary gold, the contribution of Asean countries is not even 1%. The total import of gold in these two categories in 2007-08 was worth $16.7 billion or Rs 80,000 crore, of which Asean countries contributed just 0.5% at $88.6 million or Rs 440 crore.

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