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India Gold Smuggling Jumps as "Mobilize Gold" Schemes Begin

India's jewelry & banking industry wants to "mobilize gold" from households and temples as smuggling rises...
GOLD SMUGGLING into India – the world's No.1 consumer nation until 2013 – has jumped according to local press reports, thanks to the government's strict anti-import measures.
Aimed at reducing India's large trade deficit (it has no domestic gold mine output), the moves have also led the local gold and jewelry industry to "mobilize gold" already held by Indian households.
Private India gold holdings are estimated between 15,000 and 20,000 tonnes – more than 10% of all the gold ever mined in history. Indian temples may account for up to 5,000 tonnes of that total on some estimates.
As the government, banking and jewelry trade look for ways to mobilize that gold, and use it to meet new domestic demand, India imported only 100 tonnes of gold in total over the 3 summer months, according to World Gold Council managing director Somasundaram P.R. today.
China has been importing that much each month through Hong Kong alone, net of exports, since May, data showed Tuesday.
Even so – and with gold smuggling jumping after the government first raised gold bullion import duty to 10% and then gold jewelry duy to 15% last month – official 2013 imports may reach 1,000 tonnes, Somasundaram adds. 
The Times of India meantime reports the seizure of 32 kilograms in smuggled gold from the toilet of an airplane landing in Chennai from Dubai on Sunday.
That's only the latest report in the surge seen since the Indian government imposed strict re-export rules and higher import duties in late spring. A research paper from the Reserve Bank of India first discussed "mobilizing gold" held by households, to sidestep the need for imports, in January.
"Eligible jewellers will [now] help collect unused and idle gold from households and temple trusts," says Ashok Minawala, former chair of the All India Gems & Jewellery Trade Federation. Describing the new Rashtriya Swarna Nivesh Programme, he said it aims to mobilize gold holdings and so reduce gold bullion imports.
"In three years, we can help mobilise 1,000-1,500 tonne of unused or idle gold," says Minawala, adding that the Reserve Bank of India is looking to approve the scheme – which pays depositors interest in cash or gold – in the next 10 days.
DNA India meantime reports 5% per year interest rates – paid in gold – are being offered on gold deposits made by Indian householders with Tribhovandas Bhimji Zaveri.
The TBZ Gold Plan will pay 10 grams of gold per year on every 100 grams deposited if that metal was first bought from its shops, says Kiran Dixit, group head of marketing and advertising.
At last week's London Bullion Market Association conference in Rome, Shekhar Bhandari – executive vice president of Kotak Mahindra Bank – said it may take only 3 years to start mobilizing gold held by Indian temples, and using it to satisfy the country's annual demand for 10 years running.

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