Import duty on gold import increased; Higher prices to dampen near-term jewelry demand

Government of India has revised import duty on gold from fixed INR300/10gm to 2% ad valorem. At current gold prices, the import duty works out to INR548/10gm, up 83%. We believe this will increase jewelry prices by INR320/10gm and further impact the near term demand and volume growth.

India is one of the largest importers of gold with CY10 imports at 959 tons worth USD41b. 9MCY11 has seen imports of 753 tons worth USD36b.

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