The foray of large players into gold recycling business is likely to reduce India’s over-dependence on gold imports. The boom in gold recycling business may help liquidate tons of gold held in households and temples. Ultimately, this should help gold jewelers to source their requirement from domestically available gold instead of relying on imported gold.
According to World Gold Council (WGC) estimates, only 8% to 10% of the Indian gold demand is met by recycled gold. This is much lower when taking into account the fact that nearly 35% to 40% of the world requirement is met by recycled gold.
Earlier in 1999, India had introduced Gold Deposit Scheme. The scheme failed to garner old gold as the account could be opened only with minimum initial deposit of 500 grams, thus making it unaffordable for households. The scheme was used only by temples who wanted to deposit the gold received as donations.
MMTC-PAMP which has been running a trial store in New Delhi for over an year to accept used gold, has now decided to commission its first formal gold recycling store in December this year. The refiner plans to start more such stores during 2015. MMTC-PAMP has set up its own facility in Gurgaon to refine the collected scrap gold.
Another large player-Muthoot Group had announced its foray into gold recycling business by opening its first ‘Gold Point’ retail outlet Monday. The company plans to launch three more retail units in South India during the current fiscal year, to accept scrap, old and used gold items from customers. Muthoot Group has partnered with Mumbai-based Infinium Precious Resources to reprocess and refine the collected gold.
The entry of big players like MMTC-PAMP and Muthoot is likely to lift the transparency of gold recycling business in the country by attracting more households. This, in turn, may help the country to reduce its gold import bill. As per rough estimates, 25,000 tonnes of gold are lying idle with Indian households and temples.