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To: Bobby Yellin who wrote (33701)	5/12/1999 8:19:00 AM
From: Alex	Respond to of 116764

Smuggling Gold in India Taxes and duties create a black market, as usual Last year's 60 per cent increase in India's import duty on gold has led to a premium over world prices, despite their downward trend, and to the resumption of large-scale smuggling. The increase has countered the aims of the then government when it liberalised the import of gold in 1990 by repealing the Gold Control Act, which led to a big reduction in smuggling. "[Back then] smuggling would take care of more than three-quarters of domestic demand," said a trade official. "Gold in India today commands a 9 per cent premium to world prices and this is bringing smugglers back into the business." The government's objective is to optimise revenues from gold imports without opening the floodgates to smuggling. Although it does not feel "too comfortable" about the jump in gold imports, which are second only to oil imports of around $7.5bn, it has nominated several banks and trading houses to "import the metal without any limits". In 1992, the import entitlement of non-resident Indians was doubled to 10 kg every six months and there is now a special import licence for jewellery exporters. "The unrestricted import facility and a low customs duty of Rs250 ($5.84) per 10 grammes took the wind out of smugglers' sails. Therefore, we were surprised when the government raised the import duty by 60 per cent to Rs400 per 10g in January last," said the official. According to the World Gold Council, gold holds a unique position in rural India, where the banking system is not well developed and the people are not aware of other investment options. Villagers like gold because it is easily sold for cash and can be pawned to make emergency payments. When India harvests are good demand for gold, mostly in the form of jewellery, rises. "The bumper food-grains harvest of over 200m tonnes, including a record 73m tonnes of wheat, in 1998-99 (April to March) will leave a lot of surplus cash with the farmers, whose faith in the yellow metal remains as strong as ever," said J. Chandra, vice-chairman of PC Chandra, India's leading jeweller. Mr Chandra said the share of rural India in the country's annual gold consumption is about 65 per cent, but this goes up in a good crop year. Indians are buying a lot more gold this year but prices are still drifting lower because of higher imports and in keeping with the world trend. "Besides the push given by a good harvest, what is also boosting demand in India is that gold jewellery is back in fashion with women and the men have also started using a lot of accessories made of gold," said a World Gold Council official. "The improvement in urban demand has also got much to do with the industry acquiring the capability to make jewellery to world standards. The creation of gold hallmarking institutes at the behest of the WGC and the Bureau of Indian Standards has led to significant improvement in the quality of jewellery. Indians today are buying jewellery with a greater degree of confidence," said Mr Chandra. Indian jewellers discovered only last year that occasions such as Valentine's Day and Mother's Day could be exploited to promote the sale of gold. The idea came from the WGC. Its appetite for gold has made India the world's biggest consumer of the metal. The WGC says gold imports were up more than 10 per cent to 719 tonnes in 1998. A lot of undeclared income in urban areas is also invested in gold. The WGC estimated that in 1996 some 365m Indians owned gold. By now, half India's more than 1bn people are said to own gold. Some estimates say Indians own over 10,000 tonnes of gold worth more than $100bn. The size of the market and the growth in demand have made India the focus of WGC attention. Its offices in Bombay, Delhi, Calcutta and Madras are promoting gold in a variety of ways. "We are trying to upgrade the skills of Indian artisans. Promoting Indian jewellery abroad, particularly in Europe and the US, is a major concern for us," said an official. According to WGC, more than 2m Indian artisans make gold jewellery which is sold through 250,000 retail outlets. The Financial Times, May 12, 1999

To: Bobby Yellin who wrote (33701)	5/12/1999 8:23:00 AM
From: John Hunt	Read Replies (3) \| Respond to of 116764

<< Why did you put that comment in at the end? >> I guess because I thought it also cast most of us on this thread as right wing wackos ... I do have a weird sense of humor and it did have a < vbg > after it! << if you make jokes tongue in cheek of course .. you are feeding people who are making a killing in the market by bothering money for nothing and then becoming too big too fail.. >> Huh? ... IMHO, you are getting way too sensitive ... Whoever said life was fair? Regards, John