Domestic gold production by incumbents and new players will expand to 100 tonnes by 2030, significantly adding to foreign exchange reserves, improving the trade balance, and contributing to GDP, said the industry body PHDCCI.
The Indian gold processing and manufacturing industry is poised for substantial growth and transformation, promising extensive economic benefits and supporting the Indian economy on a higher growth path to “Viksit Bharat by 2047,” said Sanjeev Agrawal, President of the PHD Chamber of Commerce and Industry.
According to a study on “Framework to Strengthen India’s Gold Processing Industry: A Step in Building Gold Self-Reliance” conducted by the PHD Research Bureau, PHDCCI, India’s gold processing and manufacturing industry is set to see substantial investments, rising from Rs 1,000 crore in 2023 to Rs 15,000 crore by 2030, said Agrawal.
These increased investments will enhance employment from the current level of 3,000 to 25,000 workers, he said.
This employment creation will have a positive ripple effect on the economy, improving livelihoods and creating a virtuous cycle of economic growth, said Agrawal.
The recent efforts of the gold processing and manufacturing industry have made steady strides for futuristic production possibilities, aiming to meet a large portion of gold demand by 2047, he said.
India has a large domestic demand for gold, which is 17% of the total world gold demand and is largely met by imports, said Agrawal.
Backed by expanding domestic gold production from the current level of 16 tonnes to 100 tonnes by 2030, net imports will decrease significantly, said Agrawal.
By adjusting the value of imported finished gold to that of imported raw gold, this will save USD 1.2 billion in foreign exchange reserves and improve the trade balance, said Agrawal.
Total gold supply is expected to increase from the current level of 857 tonnes to 1,000 tonnes by 2030, driven by a 2.4% (average) annual growth rate, he said.
This thrust in domestic gold production will enhance economic self-sufficiency and contribute to the GDP, with the share of gold production in GDP increasing from 0.04% currently to 0.1% by 2030, he said.
This influx of capital will drive technological advancements, facilitate infrastructure development within the sector, reduce the cost of processing gold, and stimulate global expertise and partnerships, fostering innovation and best practices within the industry, per Agrawal.
We appreciate that currently, the government provides a zero-rated duty on the import of gold ore concentrates (HSN-26169010), which has been a pivotal factor in attracting investments and technical expertise, he said.
We expect that GST revenues will surpass the duty foregone, indicating that even if the government maintains the current duty exemption rate, it will still collect substantial GST revenues, said Agrawal.
GST paid on gold is expected to increase from Rs 300 crore to Rs 2,250 crore by 2030, whereas the duty foregone by the government is projected to rise from Rs 285 crore in 2023 to Rs 1,820 crore by 2030, reflecting the expanding scale of the domestic gold industry, he said.
Overall, the future of the Indian gold processing and manufacturing industry looks promising, with widespread positive impacts on employment, investment, trade balance, and government revenues, he added.