As gold, diamond demand soars, Indian government may curb imports

As the demand for gems and jewelry soars in India, the nation's central government may halt gold and diamond imports within the next decade as it encourages domestic exploration.

RENO, NV - 

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) predicts that gold and diamonds will continue to drive jewelry growth in the domestic market, pushing jewelry demand to $20 billion by 2010 and $30 billion in 2015.

ASSOCHAM President Venugopal N. Dhoot forecast that "diamond jewelry consumption is likely to jump nearly 80% in 2010 and over 95% between 2010 and 2015." He attributed future growth to the purchasing power of the middle class and surging incomes level.

India consumes 800 tonnes of gold, accounting for 20% of world consumption, of which 600 tonnes go into making jewelry. "It provides employment to 1.3 million people, directly and indirectly," according to Dhoot.

ASSOCHAM also called for simplification of the tax system, adding the taxation burden on domestic gems and jewelry needs "to be curtailed and made simplified with diamonds grading."

The group declared that it is "apprehensive that this year's export targets would be adversely affected if the rupee appreciation against the dollar is not judiciously arrested."

Meanwhile, Union Minister of State for Mines T. Subbarami Reddy told a seminar Friday that the Indian Central Government has decided to stop the import of gold and diamonds within the next 10 years. Exports of jewelry from Indian grew 24% for the period from April to August to $7.75 billion dollars.

The Centre plans to emphasize the exploration of diamond and gold in the nation's five gold and diamond mining states. The minister estimated that India has about 9% of the world's total gold reserves.

The Union Mines Ministry will provide guidance to state governments through the Indian Bureau of Mines and the Geological Survey of India.

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