Gold Exports to Increase threefold in 2016
Performance in the first half of this year for gold and jewels have been very low due to the global economic slump, but experts predicted that in the second half considerable improvements were expected due to the nearing of various festivities all across the globe and also global exports are predicted to increase at this second half of the year. Gold latest price in India for 10 grams has been hovering around Rs, 30,700 with some fluctuations observed in India.
Looking at International gold market amid various speculations like the rates of interest raised by the US central bank will be slow, gold advanced. As the dollar declines in the meetings of July investors were holding on with abated breath that minutes of the meeting of Federal Reserve be released, and this really had the sentiments buoyed. Globally 0.6% rise was observed for gold price hitting to $1,347 an ounce figure. The market had supported the upside along with an increased buy observed among jewelers to meet the demands of the festive season.
Market Sentiment
The figures for Gold exports 2015 for India as reflected sometime in May had been hit by the global economic scenario just like the imports were hit within the nation and the international market. Compared to May 2014 the contraction observed in gold exports was close to a percentage of 20%, while its imports percentage was low by 16.5% in the same period. This contraction was observed from December 2014 in fact.
As observed in the period of last 6 years the exports had declined big time in the first half of the year for gold and gems which was a clear indication that the penchant for luxury good had hit a low due to the struggling global economic scenario. But this decline was somehow compensated and to an extent nullified by a sudden sharp upsurge observed in the exports of gold medallions and coins. Gold jewelry finds its own place in every nooks and crannies of almost every popularly gold selling nation but then in order to make the ornaments bullion was highly coveted and that was something which was not available easily at all. For exporters the scenario grew piteous since the option of purchasing gold from the open market is not a very feasible option for them at such high duty. And this would be really expected of them in order to be in the race and give competition to players who are dealing in gold belonging to nations where gold is available duty free.
Lots of Indian business found the grounds really favorable to set up their base in nations like Thailand and Dubai which of lately have emerged as big time manufacturing hubs. Schemes like Merchandise Exports from India or MEIS scheme in short or some special incentives like interest subvention to promote the exports of gold and jewelry is highly desired. It is not like these are out of the world advantages and facilities; they have been extended to some of the sectors which are mainly oriented more towards exports, so such can be extended for gold export as well.
Impact of Gold Import Bill in 2016
The FY 16 gold import bill till the month of January was recorded to be $8.87 billion which was an all time high. In the last financial year India imported almost $10.6 billion. Prices have been low but the volumes had been really high and judging by the overall scenario the bill has been under control in terms of gold. These dynamics are expected to change as volumes are expected to rise along with the prices. The import bill is dependent on prices and tonnages and it is expected that for FY 16-17 the import bill will be higher by almost 1 million tonnes and even gold pricing are to increase by 10 to 15% as pointed out by Godrej International Director, Dorab Mistry.
A very good improvement in the business sentiment has been observed among the largest consumer which is America responsible for almost taking up India’s half the jewelry production. This is a hopeful moment and can be the herald for better times and India can see more exports of gold.
India's Relation with the Global Gold Market
Another Asian country that is expected to lift its restrictions on exporting gold was Myanmar. Discussions are on still with various governments departments and industrialists as revealed by the Assistant Secretary at the Ministry of Commerce to lift export restriction on various items like diamond, gold, crude oil and so on. Various departments involved are Myanmar Federation of Mining Association, Myanmar Gold Entrepreneurs Association, Natural Resources and Environment Conservation, and Myanmar Gems and Jewelry Entrepreneurs Association and some more.
The ministry is under the consideration to allow gold imports along with giving the acceptance for export permits. If any company can import gold from any other nation then it can be allowed to export gold jewelry to other nations as well.
But the Ministry has to significantly focus in order to bring about a solution for various issues haunting around local gold mining companies who are interested in exporting raw gold. Blocks of gold will be allowed to import and be exported as well. As of now there is a very sad scenario where the gold and diamonds cross the borders of the country illegally as pointed out by sincere traders. If gold is ticked off by the commerce ministry from the restriction list of items that can be exported then that can really help in filling the government coffers in a fruitful way and smuggling can be battled with along with meeting international gold demand or jewelry demand can be met. As of now in the country the smugglers take advantage of this tax free environment and exploit it to have their pockets filled with all the proceeds which are done at the cost of the livelihoods generated by the common mass of Myanmar and wealth of the nation as pointed out by Myanmar Gold Trading Association’s senior officials.
So many are counting on their hopes as the second half of the year arrived with festivities knocking at the doors for gold exports to rise really sharp.
