Pundits are predicting that the price of gold will begin to rise once India’s new prime minister acts on his election promises and changes the country’s import regulations.
Incoming prime minister Narendra Modi and his BJP party are believed to be considering lifting the rules which limit the volume of gold which can be imported.
The existing ‘80:20 rule’ set a 20% quota on the amount of imported gold for re-export. But instead of helping India’s economy, the legislation has contributed to a rise of gold smuggling through the black market.
India is the world’s second largest importer of gold. People in the world’s most populous democracy are known to spend lavishly on gold jewellery and gifts.
Some 825 tonnes of gold were imported last year down from 860 tonnes in 2012, partly due to the increase in duties and restrictions. At the same time, illegal imports were thought to account for 200 tonnes of supply.
Currently, gold is trading at about $1,300 (£771) per ounce.
