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Ashok Chakra gold coins could revive investment, reduce dependence on imports |
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KOLKATA: The first lot of 'India gold coins' bearing the Ashok Chakra set to be launched by the Narendra Modi government is likely to generate some investment demand in a lacklustre market and reduce the country's dependence on imported coins, traders and jewellers said.
India has been importing about 60 tonnes of gold coins annually that are sold at a premium of 8-10 per cent.
"There is a lot of interest among the buyers regarding India gold coins," said Saurabh Gadgil, vice-president of India Bullion & Jewellers' Association. "The coins will be available in denominations of 5 gm and 10 gm initially. What is good for India is that fewer coins will be imported this Dhanteras if the government introduces the coins."
According to industry executives, the government has initially ordered 50,000 gold coins, of which 20,000 coins are of 5 gm and 30,000 coins of 10 gm, they said.
The coins are being manufactured by the Security Printing and Minting Corporation of India and will be sold through banks, post offices and state-run MMTC, which will sell them through the World Gold Council, they said.
Ketan Shroff, director of bullion trading firm Pentagold, said the launch of these coins may help revive investment demand.
As per the World Gold Council, total investment demand for gold in India during the quarter to June was down 30 per cent compared to that a year ago, while in value terms it was down 31 per cent.
The total demand for gold in the country fell 25 per cent in the quarter to June to 154.5 tonnes compared with that a year ago. In terms of value, the demand was down 26 per cent, while the total jewellery demand was down 23 per cent and in value terms it was down 24 per cent.
"Though the Q3 figures are yet to come out, the investment demand for gold fell further as July-September is a slow-moving quarter for gold trade," said Shroff.
But Rajiv Popley, director of Mumbai-based jewellery firm Popley & Sons, said India gold coins can only become popular if they match the Swiss standards. "At present, Swiss gold coins, which have a purity of 999.9 (24 carat), are imported to India whereas those manufactured in India have a purity of 995. The India gold coin has to match the Swiss standard," said Popley.
Swiss coins are tamper-proof and come with a certification that is acclaimed worldwide, said Popley. "The India coins can give a tough fight to imported Swiss coins if they have all these qualities. India also imports coins from Australia and Canada," he said.
ET View: Deposit gold, buy bonds
Gold is a dud asset. Indians should listen to the PM and invest in the two gold-related schemes to be launched this Dhanteras. They can deposit their gold and earn an interest on their deposit. The physical gold will be then given to jewellers, bringing down the need to import. They can also choose to invest in a financial asset equivalent to gold and earn interest on the value invested. It would help investors and the economy. The schemes can be a draw only if the government ensures that the tax officer will not come calling on a KYC-compliant depositor.
Source : economictimes.indiatimes.com
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