Gold refining and recycling

India gold market series

About the World Gold Council Contents
We’re the global experts on gold. Gold refining and recycling 02

Leveraging our broad knowledge and experience, we Executive summary 02

work to improve understanding of the gold market and The refining industry in India 02
underscore gold’s value to individuals, investors, and The key role of recycling 02
the world at large.
Standards and sourcing 03
Collaboration is the cornerstone of our approach. Looking ahead 03
We’re an association whose members are the world’s
most forward-thinking gold mining companies. Combining India’s gold refining landscape 03
the insights of our members and other industry partners, Tax advantages have underpinned the growth
we seek to unlock gold’s evolving role as a catalyst for of India’s gold refining industry 03
advancements that meet societal needs. The refining sector has grown over the last
decade but expansion is slowing 05
We develop standards, expand access to gold, and
Most refineries focus on kilo bars and
tackle barriers to adoption to stimulate demand and
minted products 06
support a vibrant and sustainable future for the gold
market. From our offices in Beijing, London, Mumbai, Responsible sourcing and India Good
New York, Shanghai, and Singapore, we deliver Delivery Standards  07
positive impact worldwide.
India’s legislative landscape enables responsible
sourcing of doré 07
For more information India Good Delivery Standards (IGDS) should
boost the local refining industry 07
Research and Strategy:
The Revamped Gold Monetisation Scheme
Adam Perlaky Louise Street (R-GMS) will further encourage IGDS 08
[email protected] [email protected]
+1 212 317 3824 +44 20 7826 4765 Recycling trends 08
Johan Palmberg Mukesh Kumar Recycling is an important source of supply
[email protected] [email protected] for jewellers 08
+44 20 7826 4786 +91 22 317 3826 Jewellery is the largest source of recycling 09
Krishan Gopaul Ray Jia Drivers and challenges to gold recycling in India 10
[email protected] [email protected]
+86 21 2226 1107 Key drivers of recycling in India 10
+44 20 7826 4704
Challenges to gold recycling in India 11
Juan Carlos Artigas John Reade
Head of Research Chief Market Strategist Outlook11
[email protected] [email protected]
+1 212 317 3826 +44 20 7826 4760 Appendix 1: List of gold refineries in India 12

Contributors13

Gold refining and recycling | India gold market series 01

Gold refining and recycling

As India’s demand for gold outpaces its domestic mine supply,

demand is fulfilled by imports as well as gold recycled locally.
Recycling in India is a Rs440bn industry making up 11% of
the average local annual supply.1
The number of refineries in India has increased over the
past decade and this has boosted local job creation. Local
refineries have also enjoyed enhanced profitability through
imports of gold doré, due to its advantageous duty differential.2
To position India as a competitive refining hub, policy
measures have to create other advantages, including export
of bars, consistent supply of doré or scrap and a strong
framework of standards and infrastructure.

Executive summary The key role of recycling

The refining industry in India The country ranks fourth in global gold recycling; over the
past five years 11% of India’s gold supply has come from
India’s gold refining industry has seen significant growth ‘old gold’; driven by movements in the gold price, future
over recent years. It is estimated that from 2013 to 2021 gold price expectations and the wider economic outlook.
capacity increased by 1,500t (500%). But the contribution But gold recycling faces headwinds. Anticipated growth in
of the informal sector should not be overlooked; it perhaps the Indian economy could mean higher incomes and less
accounts for as much as an additional 300-500t. distress selling. And while fashion conscious consumers
tend to keep their gold jewellery for shorter periods of
Advantageous custom duty on gold doré fuelled the
time and are more confident of gold’s value when they
industry’s growth while it lasted. But the introduction of
sell, refineries cannot always make use of this gold.
the Goods and Services Tax (GST), as well as the impact
of the pandemic and other macro-economic factors Collection centres for recycled gold – set up by some
affected refining profitability, especially among smaller of the larger refineries – are few and far between, and
players. Even today, the remaining small-scale refineries refineries are reluctant to buy direct from jewellers who
face stiff competition for a limited amount of imported deal largely in cash as source verification is impossible.
gold doré. Until these issues are resolved it seems that a sizeable
percentage of India’s gold recycling industry will remain
unorganised.

1 Recycling industry size calculated as per gold recycling volumes in 2021 and average domestic gold price in 2021. Average annual Indian supply
based on last five-year Indian supply (2016-2021).
2 Metal recovered from an ore body formed into unrefined bars is known as “doré”. These unrefined bars contain gold as well as other metals
(such as silver or copper). The gold doré bar contains less than 5% impurities.

Gold refining and recycling | India gold market series 02

Standards and sourcing India’s gold refining landscape
The gold refining industry is a big employer, recognised Tax advantages have underpinned the growth of
as such by the government and supported by beneficial India’s gold refining industry
fiscal policy, such as the lower customs duty on unrefined
gold doré compared with refined bullion. Sourcing The import duty differential that doré has enjoyed over
guidelines have been introduced to ensure that gold doré refined bullion has spurred the growth of organised
comes direct from the country where it is produced. Gold refining in India. To provide some context, in August 2013
recycling has been aided by the introduction of the Indian the Indian government adopted a more accommodative
Good Delivery Standards (2020), which help refineries to stance towards domestic gold refining, introducing a
establish a chain of custody and produce bars that meet duty differential between refined gold bullion and doré.3
the requirements of commodity and stock exchanges. From 13 August 2013 to 31 January 2016 the duty on
The Revamped Gold Monetisation Scheme (R-GMS) gold bullion was 10% with a duty differential of 1%-
allows interbank lending of gold against gold metal loans; 2% for refineries depending on the zone in which they
it also enables jewellers to act as collection and purity operated. Post the union budget of 2016 the duty on
testing centres and larger refineries to act as centres for gold doré imports for refineries in the Excise Free Zone
collection, testing and assaying. (EFZ) and Domestic Tariff Area (DTA) was 8.75% and
9.35% respectively, while the custom duty on bullion
Looking ahead was maintained at 10% – narrowing the gap for refineries
India’s demand for gold shows no sign of abating and to 0.65% and 1.25% respectively. Spurred by these tax
while demand outweighs supply, recycling will continue to incentives, around half of India’s new refining capacity
be key. The refining industry in India, currently stabilising since 2014 has opened in the EFZs, mostly in the state
after a period of change, is looking to the future. Some of Uttarakhand (Appendix 1).
refineries choose to sell direct to investors and although The Goods and Services Tax (GST), introduced on 1 July
only 5% of transactions are currently made digitally, 2017, subsumed other local levies – such as the excise
doubtless this will increase as investors recognise the duty and state-level value added taxes – and meant that
price advantage of buying direct. The raft of government there was no additional benefit to refiners in the EFZs as
guidelines, standards and processes will help refineries they now faced the same tax burden as those within the
improve the traceability of recycled gold and become DTAs (9.35%). With the custom duty maintained at 10%
less dependent on gold doré imports, as well as limit post GST, the duty differential between gold doré imports
the unorganised collection of scrap gold and increase and refined bullion remained at 0.65%. Changes to the
efficiencies in recycling. import duty on gold doré since then have followed those
on refined gold; the former still benefits from a differential.
For instance, even after the duty cut in 2021, the gap
between import duty on gold doré (10.09%) and refined
bullion (10.75%) has remained at 0.66% (Figure 1).4

3 Press Information Bureau.

4 Union budget impact on Indian gold market.

Gold refining and recycling | India gold market series 03

Figure 1: A stylised illustration of gold doré/bullion duty differential

Ghana Peru Bolivia Switzerland UAE South Africa

Doré Bullion
imports imports

From Tax: 8% CVD (Countervailing Duty)

13 August
2013

Refineries in EFZ Refineries in DTA Tax: 10% BCD (Basic Custom Duty)
(Excise Free Zone) – (Domestic Tariff Area) –
Effective Tax: 8% (8% Effective Tax: 9% (9%
CVD and no excise duty) excise duty, CVD rebated)

Tax differential between Tax differential between

refined bars from EFZ refined bars from DTA
and imported and imported
bullion bars: 2% bullion bars: 1%

From Refineries in EFZ Refineries in DTA Tax: 10% BCD

1 February (Excise Free Zone) – (Domestic Tariff Area) –
2016 Effective Tax: 8% Effective Tax: 9.35%
(8% CVD and no (9.35% excise duty,
excise duty) CVD rebated)

Tax differential between Tax differential between

refined bars from EFZ refined bars from DTA
and imported and imported
bullion bars: 1.25% bullion bars: 0.65%

Tax: 9.35% (effective tax is the same in both EFZ and

From Tax: 10% BCD
DTA as local taxes subsumed under GST)
1 July 2017

Tax differential between gold doré and imported

bullion bars: 0.65%

From Tax: 11.85% Tax: 12.5% BCD

1 July 2019

Tax differential between gold doré and imported

bullion bars: 0.65%

From Tax: 10.09% Tax: 10.75%

1 February
2021
Tax differential between gold doré and imported
bullion bars: 0.66%

Gold refining and recycling | India gold market series 04

 But the informal sector still accounts for a sizeable volume,
perhaps as much as an additional 300-500t.7 It is worth
Refining sector noting that the scale of unorganised refining has fallen
as the scrap market has responded to the government’s
tightening of pollution regulations (which led to the closure
of many local melting shops) and as more retail chain
stores recycle old gold using organised refineries.

This growth in refining capacity has facilitated a dramatic

rise in doré shipments: from just 50t in 2013 to a record
2013 to 2021 276t in 2018.8 In 2020 imports fell sharply to 159t, largely
due to the impact of COVID-19. However, in 2021 – as a
Capacity in the industry increased by 1,500t sense of normality gradually returned – they rose to 220t
(Chart 2). As a result, gold doré’s share of overall imports
has risen from just 7% in 2013 to around 22% in 2021.

The refining sector has grown over the last decade

Chart 2: Indian gold doré imports recovered in 2021
but expansion is slowing Indian gold doré imports (tonnes) and purity (%)
India’s gold refining landscape has changed notably over Tonnes Purity %
the last decade, with the number of formal operations 450 75
increasing from less than five in 2013 to 33 in 2021.5 As 400
70
a result, the country’s organised gold refining capacity 350
has surged to an estimated 1,800t compared to just 300t 300
65

in 2013.6 The majority of these refiners have an annual 250 60

capacity less than 50t (Chart 1). 200 55
150
50
100
Chart 1: The majority of Indian gold refineries 45
have an annual capacity less than 50t 50
India’s gold refineries by capacity 0 40
2016 2017 2018 2019 2020 2021
Gross Content Fine Content Doré Purity %
1
4 Source: Metals Focus, World Gold Council

3 The expansion of the Indian refining sector has slowed in

<50t
51-100t
recent years as GST eliminated the advantage enjoyed by
101-200t EFZs and led to a cutback in new capacity within these
>200t zones. New refinery capacity was further discouraged
when the Uttarakhand government levied an entry tax of
25
around 0.2% in March 2016 in an attempt to narrow the
duty differential between DTAs and EFZs.9

Other factors have also impeded growth in the refining

*As of January 2022. sector. Duty differential in EFZs had encouraged many
Source: Metals Focus, World Gold Council companies to start refineries but once those advantages
disappeared, many closed, leaving only genuine operations
in existence.10 Some refineries importing doré were unable
to meet the accreditation standards set by the Bureau
of Indian Standards (BIS) and the National Accreditation

5 Bureau of Indian Standards.

6 Metals Focus.
7 Metals Focus.
8 Fine gold content terms.
9 The Uttarakhand Tax on Entry of Goods into Local Areas (Amendment) Bill, 2016.
10 A ‘genuine operation’ refers to an actual gold refining setup rather than a refining and melting shop disguised as a refining operation to avail the tax benefit.

Gold refining and recycling | India gold market series 05

Board for Testing and Calibration Laboratories (NABL), Most refineries focus on kilo bars and
and they too were forced to shut.11 And finally, the minted products
almost persistent gold market discount – due to slowing
Only a small number of Indian refineries (MMTC-PAMP,
economic growth, weak gold demand and the pandemic –
Bangalore Refinery, Kundan and India Govt. Mint) have the
meant that some doré imports became unprofitable even
capability to process speciality items such as chemicals,
with the duty differential (Chart 3). Changes to policy and
alloys and salts. These refineries also treat industrial scrap.
taxation might have helped such refineries. For example,
The remaining refineries offer more traditional bars and
if they had been allowed to export bullion bars and able
coins – notably cast and minted.12
to reclaim custom duty and GST on exported bullion bars,
their operations may have had the capacity to withstand In general, Indian refineries tend to focus on producing kilo
times of weak domestic market demand or periods when bars and small minted bars. The former is predominantly
the refinery had to close, such as the nationwide industry sold to manufacturers, wholesalers, large retailers and
strike in 2016 or the COVID-19 lockdown in 2020. institutional/high-net-worth investors, whereas minted
bars are offered to small/medium retailers and individuals.
Metals Focus’ discussions with refineries revealed that
Chart 3: The persistent discount in the domestic gold 80% to 85% of their business is in the form of cast bars
market has created headwinds for doré imports
National Commodity & Derivatives Exchange Limited (NCDEX) (100g and kilobars), with the balance in minted products
polled premia/discount for domestic gold spot price vs landed of 100g and below.13 Interestingly, a large proportion of
gold price in India 100g cast and minted products are used by manufacturers
US$oz
particularly in Chennai and Ahmedabad.
20
10
Minted products include 2g, 5g, 8g, 10g, 50g and 100g,
0
the most popular of which are 5g and 10g and account
-10 for more than 60% of sales.14 Retail premiums on these
-20 bars and coins vary between 2% and 8% depending on
-30 the weight and point of sale.15 Investors tend to pay less
-40 when buying direct from a refinery and many refineries
-50 now sell direct to investors via apps and websites or, more
-60 recently, through financial intermediaries such as Google
-70 Pay and Paytm. While digital gold and e-commerce have
-80 lifted online sales, less than 5% of overall gold purchases
Jan 19 Jul 19 Jan 20 Jul 20 Jan 21 Jul 21 Jan 22
are transacted digitally16 with 80% to 85% of investment
Source: NCDEX, World Gold Council products still purchased from jewellery stores.17 Although
jewellery retailers still account for the majority of
investment product sales, this figure has declined from its
Indian refineries face growing competition for a limited previous level of more than 90%. Sales by jewellers fell
amount of doré and this too has impacted the industry’s as refineries began selling direct via online and in store,
growth. This is a particular challenge for small-scale enhancing their profit margins by removing a step in the
refineries who struggle to source gold doré from large- sales chain. And with small bars and coins now being sold
scale mines due to a lack of finance and the scale of their predominantly during key festivals, jewellers prefer not
operations. The situation could be alleviated if nominated to increase their inventories when margins do not justify
agencies (such as MMTC and Diamond India Pvt Ltd) the holding cost. Overall, margins on these products have
and banks were allowed to import gold doré. In addition, been curtailed through competition and many jewellers
the Indian government could facilitate joint ventures with have chosen to stop selling bars and coins altogether.
overseas mining companies to guarantee the secure off-
take of gold doré. Such steps should help facilitate the
growth of refining in India.

11 Bureau of Indian Standards.

12 Cast bars/coins are produced through moulding whereas minted bars/coins are produced through a continuous casting process.
13 Metals Focus.
14 Metals Focus.
15 Metals Focus.
16 The key festive periods of Akshaya Tritiya and Diwali accounts for more than 50% of online sales.
17 Metals Focus.

Gold refining and recycling | India gold market series 06

Responsible sourcing and India Good These standards help BIS-accredited Indian refineries
Delivery Standards deliver their bars to the commodity/stock exchanges.
To that effect, the National Stock Exchange (NSE),
India’s legislative landscape enables responsible Bombay Stock Exchange (BSE) and the Multi Commodity
sourcing of doré Exchange (MCX) have recognised eligible refiners who
satisfy the criteria of each exchange. Currently, only select
In recent years the gold industry has increasingly focused
refineries are eligible to deliver to these exchanges
on responsible sourcing. The government has lent weight
such as:
to this focus through the introduction of guidelines on
sourcing doré. These ensure that gold is sourced directly • MMTC-PAMP Pvt Ltd: MCX
from the country where it is produced. The Ministry of
• Gujarat Gold Centre Pvt Ltd: NSE
Finance also stipulates a minimum weight of 5kg per
bar, with importers requiring a packing list and an assay • Kundan Care: NSE, MCX
certificate issued by the mining company.18 This legislation • M D Overseas: NSE, BSE and MCX
aims to help the industry establish a chain of custody. And
• Augmont: NSE, BSE, MCX
for refiners, the intention is to ensure that the imported
doré is genuine and is not, for example, recycled gold. • Parker Precious Metals: BSE
• Sovereign Metals Ltd: BSE
India Good Delivery Standards (IGDS) should boost
the local refining industry This initiative will lessen the dependency of refiners on
Prior to 2020 only London Bullion Market Association doré as they are now able to deliver bars refined from
(LBMA) accredited 99.5% purity gold bars were accepted recycled gold onto the exchange, in the process benefiting
by the domestic commodity exchanges for delivery. from more transparent price discovery due to the higher
However, in 2020, to help promote the government’s number of refineries now able to deliver bars on local
initiative of Atmanirbhar Bharat (Self-reliant India), the India exchanges. A collective effort is required from both BIS
Good Delivery Standards (IGDS) were introduced by the and industry players to ensure that, over next five years,
Bureau of Indian Standards (BIS). The standards specify a all refineries become IGDS compliant, standards are
range of measures such as fineness, weight, markings and implemented and overall trust is enhanced.
dimensions (Table 1).
The implementation of IGDS will likely boost the organised
scrap market as it will allow refineries to aggressively
Table 1: India Good Delivery Standards (IGDS) as per BIS
source scrap in the domestic market, especially from
organised retailers. Currently, scrap collection in India is
Parameter Description
largely unorganised, with jewellers often the first point
Fineness 995 or above, no negative tolerance of collection. Most jewellers also have their own melting
Refining process Aqua regia or Electrolysis shops, so can convert jewellery into crude bars that
Dimensions Length – 113mm to 117mm are sent to manufacturers or artisans. But this trend is
Width – 51mm to 55mm diminishing: in 2015, an estimated 70% to 75% of the
Height – 6.5mm to 10.5mm
recycling industry was unorganised; by 2021 this had
declined to 60% to 65%.19 With locally refined bars now
Weight 1,000g, no negative tolerance
meeting delivery requirements, the share of organised
Prominently stamped “1 Kg gold or 1,000g gold”
Marks
on the face of the bar refining is likely to increase further, as the prospect of
Identification of the refiner
better price discovery encourages jewellers to convert
crude bars into good delivery bars for delivery onto an
Fineness
exchange. This will be particularly helpful to jewellers who
Stamping weight marks
want to reduce their bullion inventory – for example during
Serial number periods when demand slumps – as delivering onto the
Year of manufacture exchange will be easier and enable better price realisation,
Source: Bureau of Indian Standards, Metals Focus,World Gold Council particularly when discounts in the spot market are high as
was the case during 2020.20

18 Custom notification 12/2012 dated 17 March 2012.

19 Metals Focus.
20 The discount in the local market widened to U$73/oz in April 2020 with the introduction of lockdowns across India due to the pandemic.

Gold refining and recycling | India gold market series 07

The Revamped Gold Monetisation Scheme (R-GMS) Chart 4: Bank’s share of official imports has declined
will further encourage IGDS with growth in refining
Tonnes
2021 saw other policy announcements specifically relating
1,000
to the gold refining sector. These include a Revamped
Gold Monetisation Scheme (R-GMS) and banks being 800
allowed to buy locally refined IGDS bars.21 R-GMS will
enable interbank lending of gold against gold metal loans 600
(GMLs) and allow for repayment using Indian refined
gold (IGDS). This has several positive implications for the 400
country’s refining industry (as discussed in the following
paragraph). The R-GMS scheme also allows jewellers to 200
act as Collection and Purity Testing Centres (CPTCs).
As they are often the primary collection centre for 0
2017 2018 2019 2020 2021
consumer scrap, the scheme could enable better
monetisation of gold. Banks Refineries Trading houses and FTWZ
Source: Indian Customs, Metals Focus, World Gold Council
Allowing banks to buy locally produced IGDS bars and
accept repayment of GMLs with Indian refined gold will
reduce the need to lease gold from overseas – a process Overall, these developments bode well for Indian refiners,
that can be quite expensive. It will also encourage refiners especially those that are both BIS and LMBA-accredited.
to increase output to meet this new demand. Previously, Additionally, as refiners compete for local scrap we expect
banks were only allowed to import gold on a consignment to see a notable increase in scrap collection centres, which
basis, as they were not allowed to source locally refined in turn will take market share from unorganised players.
gold as per domestic regulation. To provide some context, At present we estimate that organised refineries account
import share of the banks fell from 40% in 2017 (348t) 22 for less than 20% of scrap collection but we believe this
to 24% in 2021 (240t) – leaving aside 2020’s exceptional will increase to some 35% to 40% over the next four to
conditions when banks imported just 70t of gold five years.24
(Chart 4).23 Increased demand from banks will mean
that refineries will have to ramp up both doré imports and
local scrap collection. This may eventually result in the Recycling trends
share of refined gold in India’s import mix falling Recycling is an important source of supply for
even further. jewellers
Under the R-GMS refineries will act as collecting, testing Recycling is an important component of gold supply,
and assaying centres. They will also be responsible for accounting for 11% of the total Indian gold supply over the
delivering gold to banks to be used for leasing under the last five years (Chart 5). Gold sold back for cash is usually
GML. The R-GMS allows all Scheduled Commercial Banks linked to consumer sentiment and the economic backdrop.
(SCBs) to be custodians but only BIS approved refiners However, over the years the share of gold sold for cash
to refine this gold, which could benefit the industry as a has remained broadly steady, despite the economic
whole. Importantly, the deposits under the scheme can slowdown of 2012-2014 and the pandemic. This is due
now be dematerialised (converted to a digital certificate) to the vibrant gold loan industry in India, which makes it
enabling them to be tradeable and mortgageable. straightforward to borrow funds against gold rather than
selling it.
Finally, banks will also be able to import gold via the
international bullion exchange and domestic gold spot
exchange, once these exchanges are operational.

21 Amendments/Revamping of Gold Monetisation Scheme.

22 Indian Customs, Metals Focus.
23 Indian Customs, Metals Focus.
24 Metals Focus.

Gold refining and recycling | India gold market series 08

Chart 5: Recycling accounted for 11% of total Indian supply
in last five years
Recycling volume in tonnes
Tonnes
140

120

100

80

60

40

20
exchanges with the retailer for a new piece, where the
0 consumer only pays the labour charge. Metals Focus’
2017 2018 2019 2020 2021
definition also excludes process or manufacturing scrap
*Total supply includes official imports, unofficial imports and mine production. that is collected from fabricating jewellery and coins.
Total supply excludes round tripping (RT) and bullion export volumes.
Source: Metals Focus, World Gold Council Old jewellery scrap represents the largest source of
recycling in India, with an approximate 85% share of
the total.27 Major refineries have set up scrap collection
The pay-out received after selling back gold differs centres where organised retailers usually send scrap
according to the type of jewellery being liquidated and for recycling, while individuals generally visit their local
where it is sold but will usually be 3% to 5% lower than retail jeweller to recycle their gold. These jewellers also
the prevailing gold price.25 As a guide, 22k gold will be paid collect scrap from pawnbrokers/money lenders and gold
at a rate that includes the entire weight of the contained loan companies. Gold loan companies tend to offer loans
gold, whereas non-hallmarked items will be paid at a rate against jewellery over time periods ranging from one to
that decreases in line with the caratage. Pay-outs decline 36 months. Should the borrower default, the company
further in rural India due to low consumer awareness, and will auction the gold to jewellers, scrap aggregators or
here pay-outs can be 5% to 10% below those given in refineries. For many refineries, jewellery scrap from
urban centres. Metals Focus’ discussions with refineries pawnbrokers/money lenders and gold loan companies
and scrap collectors revealed that the average purity of forms the lion’s share of their jewellery scrap intake.
gold collected in south India is about 90%, in the north
it is around 85%, while in the west and east it is 86% to The other key component is old bars and coins that
89%.26 It is worth noting, however, that as awareness people either sell or exchange for jewellery; these Metals
about hallmarking has grown, purities have risen. And with Focus estimate to make up about 10% to 12% of scrap
compulsory hallmarking now in force, consumers should gold supply. While consumers often visit retail jewellers
increasingly receive a fairer price for their gold. to exchange their bars and coins for jewellery, these
investment products are seldom melted and converted
One significant development over the last few years into fresh minted products. Metals Focus’ discussions
has been the increased organisation of scrap collection with the trade reveal that many independent jewellers
(Focus 1), which is eroding the bargaining power of in small towns and cities tend to sell them back to
jewellers and other scrap buyers. This new trend is new customers.
encapsulated by some of the large corporates, such as
MMTC-PAMP and Muthoot, who are setting up collection Finally, industrial scrap is generated from end-of-life
centres across the country. electronic products, such as printed circuit boards, mobile
phones, connectors and contact points. This industrial
Jewellery is the largest source of recycling segment accounts for less than 5% of total Indian scrap
There are three sources of gold recycling: jewellery, supply. The industrial scrap market in India is largely
manufacturing scrap, and end-of-life industrial scrap. unorganised and only a small proportion finds its way to
Metals Focus’ recycling data captures “old scrap”. In the refineries. This may be largely due to the fact that only
context of jewellery, this is jewellery that is either sold a handful of Indian gold refineries have the capability to
back for cash or a retailer’s unsold stock that is melted refine industrial scrap.
down. It does not include jewellery that a consumer
25 Metals Focus.
26 Metals Focus.
27 Metals Focus.

Gold refining and recycling | India gold market series 09

Focus 1: Growth of organised recycling in India
India’s gold refining landscape has witnessed a significant That apart, to address other challenges in the industry,
shift over the past few years owing to the push towards MMTC-PAMP has adopted measures to improve scrap
organised recycling. But even against this backdrop, collection. The company has set up several collection
organised refineries have been hampered by the presence points called Purity Verification Centres, where scrap is
of local scrap collectors who have dominated the traditional weighed on authenticated scales and value is measured
gold recycling market, despite the favourable duty on doré from industry-best German XRF (X-Ray Fluorescence
imports and advancements in refining capacity. Technology) machines, in order that the customer
receives the total value of the gold. After deducting the
One of the challenges in sourcing scrap is the fact that this service charge the customer is paid the full value of their
part of the industry is still primarily reliant on cash. This gold via instant bank transfer. As logistics improve, even
reliance has deterred organised refineries such as MMTC- customers who live in cities without collection centres can
PAMP, who have steered clear of cash transactions in the now send their gold direct to the refinery.
scrap trade. In addition, scrap suppliers – such as local
jewellers – usually require a fast turnaround time and so That aside, as the jewellery industry has become more
prefer to process scrap locally rather than sending it to organised we have seen small jewellers increasingly opt to
an organised refinery further away. Furthermore, as local recycle gold with organised refineries. The implementation
scrap sellers (for example, jewellers) are extremely cost- of strict pollution control norms in some cities has also
sensitive, organised refineries – with their relatively higher negatively impacted smaller refineries and helped push
refining charges – are less popular than small-scale ones; business to the organised players.
consequently, the amount of scrap available to organised
players like MMTC-PAMP is limited. While the recycling industry is gradually becoming more
formalised, the challenges mentioned earlier remain,
As the country’s only refinery with LBMA accreditation for impeding the progress of organised refining in India.
both gold and silver, MMTC-PAMP maintains the highest Despite the considerable progress made with regard to
global standards for refined gold products. As jewellery scrap collection, Indian refineries continue to depend
manufactured by MMTC-PAMP’s rigorous refining process largely on processing imported doré.
is of such a high quality, manufacturers can significantly
reduce the rate of rejection due to quality issues. Vikas Singh
Managing Director and CEO
MMTC-PAMP India Pvt Ltd

Drivers and challenges to gold recycling levels were elevated, distress selling was not a major
in India contributing factor. In India, people prefer to pledge their
gold with banks and non-banking financial companies
Key drivers of recycling in India (NBFCs) rather than making an outright sale.
Despite being the fourth largest recycler in the world,
India recycles little of its own stock of gold (Table 2). On Table 2: India is the fourth largest gold recycling country
Gold recycling volumes of top six countries (tonnes)
average, the country accounts for about 8% of the global
scrap supply.28 Recycling is driven by current gold price Country 2017 2018 2019 2020 2021
movements, future price expectations and the economic China 143 146 169 189 168
backdrop. When the gold price jumps people tend to sell India 88 87 120 96 75
their gold holdings either to gain from the price rise or Turkey 85 113 116 75 52
to avoid spending on new gold jewellery. Research from
Italy 80 77 86 87 80
Metals Focus found that the percentage of consumers
United States 82 81 85 72 78
exchanging old jewellery increases when the gold price
rises, and when the economy is under stress – as we Egypt 76 47 50 50 44

saw during COVID-19 – gold is sold to meet everyday World 1111 1132 1273 1292 1150
needs. Surprisingly, during the pandemic, although scrap Source: Metals Focus,World Gold Council

28 Metals Focus.

Gold refining and recycling | India gold market series 10

Our econometric analysis revealed that in the short run, • Logistical hurdles to scrap collection. Many
quite intuitively, a 1% increase in price pushes recycling refineries have opened additional scrap collection
up by 0.6%. Conversely, positive GDP growth in the same centres over the years but these are still few and far
year and the previous year pushes recycling down by between and often located in bigger towns or cities.
0.3% and 0.6% respectively. In addition, a 1% increase in As a result, the process of sending scrap to a refinery
jewellery demand pushes recycling down by 0.1%.29 can be cumbersome and more time consuming than
melting it locally. Small jewellers who have only
A policy that enables households to recycle gold through small scrap volumes need to wait longer before they
banks and exchanges – with appropriate incentives – in accumulate a meaningful quantity of scrap to be sent for
return for standard gold coins that can be used to purchase processing. Unsurprisingly, they tend to use their local
jewellery, could augur well for a sustainable growth in melting shop or small-scale unorganised refinery with
recycling. Discussions with retailers also revealed that the faster turnaround times.
average time consumers keep their jewellery has fallen
noticeably over the last four or five years, falling from • GST loss on sale of old gold. The current GST
around eight to 10 years to around three to five.30 This regulations do not allow consumers to reclaim the 3%
reflects a new transparency in buyback transactions from tax they would have paid when they initially bought
organised jewellers, enabling consumers to receive the full their jewellery. This loss of GST on gold is significant
value of the gold content in their old jewellery when they and could be a barrier to consumers looking to create
sell or exchange. This enhanced trust between jeweller liquidity by selling old gold.31
and buyer, along with changing fashion trends, has
encouraged consumers to replace their jewellery pieces
Outlook
more frequently.
Recycling is driven by trends in the local rupee gold price
While this enhanced trust does not automatically translate
and the prevailing economic environment. The Indian
into higher scrap volumes, it is a key determinant in the
economy is expected to grow in the coming years and
consumer’s decision-making process when exchanging
higher incomes may reduce outright selling by consumers
or selling their old jewellery.
as the need for distress selling lessens. And as NBFCs
Challenges to gold recycling in India expand across rural India, consumers will find it easier to
pledge their gold rather than selling it outright. This will
Despite the gradual move towards a more structured bring more people into the institutional credit system and
and process-driven industry, the majority of India’s gold further discourage selling back gold to raise cash.
recycling trade remains unorganised. This is largely due to:
That said, the recycling market will be supported by
• The prevalence of cash transactions in the scrap initiatives such as the revamped GMS, which will attract
market. One of the main difficulties for organised gold held by Indian households, some of which will
refiners has been the inability to source meaningful eventually be recycled. Furthermore, Metals Focus’
quantities of scrap from jewellers. This is because small research suggests that holding periods of jewellery will
jewellers prefer cash, particularly those based in more continue to decline as younger consumers look to change
rural areas. Given that accredited refineries need to be designs more frequently; a trend that could contribute to
able to show a clear source for the scrap they buy, they higher levels of recycling.
prefer not to purchase with cash and to work only with
organised jewellers or bullion dealers.

29 Based on data from 1990 to 2020. 2020 was an aberration globally and had unexpected consequences for gold demand in that physical buying was
constrained by restrictions on movement. Likewise, recycling was also impacted. In 2020 recycling volumes in India did not respond as much to a higher gold
price as consumers preferred to use gold jewellery as collateral against loans to meet their liquidity needs. Similarly, the response of recycling to jewellery
demand was weak as consumers chose to exchange gold to meet their jewellery needs particularly during the wedding season.
30 Metals Focus.
31 Press Information Bureau.

Gold refining and recycling | India gold market series 11

Appendix 1:
List of gold refineries in India
Table 3: List of gold refineries in India*
Name Capacity (tonnes) Location (state)
MMTC-PAMP India Pvt Ltd 300 Haryana
ABANS Jewells Pvt Limited 5 Uttarakhand
Agnis Bullion 30 Haryana
AJ Gold & Silver Refinery 30 Himachal Pradesh
Altim Metals 30 Uttarakhand
Augmont Enterprises Pvt Ltd 140 Uttarakhand
Bangalore Refinery Pvt Ltd 30 Karnataka
CGR Metalloys Pvt Ltd 150 Kerala
Emerald Jewel Industry India Ltd 40 Tamilnadu
GGC Gujarat Gold Centre Pvt Ltd 30 Gujarat
Golden Star Trading Pvt Ltd 30 Tamilnadu
Goldfarb Industries Pvt Ltd 30 Gujarat
Harshini Maple Leafs 30 Tamilnadu
India Govt. Mint 30 Maharashtra,Telangana and West Bengal
Jalan and Company 18 Delhi
JBL Refineries 150 Uttarakhand
Khandwala Finstock Pvt Ltd 40 Uttarakhand
Kundan Care Products Ltd 72 Uttarakhand and Haryana
Lalithaa JewelleryMart Pvt. Ltd 30 Tamilnadu
M.D. Overseas Pvt Ltd 72 Uttarakhand and Rajasthan
Narondas Manordas 100 Maharashtra
National India Bullion Refinery 30 Maharashtra
Onkar Jewellers Private Limited 30 Haryana
Parker Precious Metals LLP 30 Gujarat
R.K. Jewels 30 Haryana
Salasar Synthetics 30 Uttarakhand
Shree Ambica Touch 36 Gujarat
Sonigara Jewellers Pvt. Ltd 30 Maharashtra
Sovereign Metals Ltd 110 Gujarat
Tasha Gold Pvt Ltd 30 Uttar Pradesh
Titan Company Ltd 30 Karnataka
Yash Oro India Pvt Ltd 30 Telanngana
Zaveri and Company Pvt Ltd 30 Uttarakhand, Gujarat

Total 1833
*As of January 2022.
Source: Metals Focus,World Gold Council

Gold refining and recycling | India gold market series 12

Contributors

We commissioned Metals Focus, one of the world’s leading

precious metals consultancies, to conduct this independent
research study with the help of their ‘on the ground’ presence
in India. With a team spread across nine countries, Metals
Focus is dedicated to providing world-class statistics, analysis
and forecasts to the global precious metals market. We are
extremely thankful to Chirag Sheth and Harshal Barot from
Metals Focus for their contributions to this report.
Mukesh Kumar from the World Gold Council also played a key
role in providing timely comments and insights that helped
towards final publication of this report.

Chirag Sheth is a principal consultant with Metals Focus Harshal Barot is a senior consultant with Metals
and based in the company’s Mumbai office. Chirag Focus, also based in the Mumbai office. He has a
analyses the precious metals market of South Asia, as well decade’s experience as a precious metals analyst
as Indonesia, Thailand and Vietnam. He has over 16 years’ and is a regular contributor to Metals Focus’ work on
experience in precious metals trading and research work prices and macroeconomics. Harshal is also jointly
for UBS and Latin Manharlal Commodities. He is also a responsible for Metals Focus’ precious metals research
visiting faculty to management institutes and features on and analyses other South Asia markets, focusing on
business news channels in India. Sri Lanka and Nepal.

Mukesh Kumar is a lead analyst with the World Gold

Council. Mukesh plays an important role in maintaining
and strengthening World Gold Council’s understanding
of India’s gold market. He has over 16 years’ experience
in metals and mining consulting and research. Mukesh
has previously worked with CRU International, Hatch
Associates and Steel Authority of India Limited.

Gold refining and recycling | India gold market series 13

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Published: June 2022