India's centuries-old gold industry is the world's biggest market for the metal, with imports meeting almost all the country's 800-900 tonnes per year requirements for jewellery and investment.
The market was only freed up in 1997, when the government allowed banks and other state-run trading firms to import the sensitive commodity directly.
Here are facts on the industry and changes taking place:
- India's gold imports rose 34.9 percent to 553 tonnes in the first half of 2011, according to the World Gold Council (WGC). Imports jumped 72 percent in 2010 to 959 tonnes.
- Imports are high but with a population of 1.2 billion, per capita consumption is relatively low. Per capita gold consumption is only 0.7 grams, half that of the United States and one-third of the Middle East, according to World Gold Council estimates.
- India's gold market is estimated to have more than 300,000 jewellers, mostly small, family-run businesses, a WGC study showed. Many jewellers are one-room shops with long-standing ties with customers, and items are often sold by weight.
- Only 31 state-run and private banks along with government trading agencies have licences to import gold because of its implications for foreign exchange flows.
- India's 2010/11 budget raised the import duty on gold and platinum to 300 rupees ($6.65) per 10 grams from 200 rupees previously, with the duty on silver raised to 1,500 rupees per kg from 1,000 rupees earlier.
- Investment purchases of gold have been rising faster than jewellery purchases. The WGC's latest data shows the investment to jewellery ratio was about 17:83 in the first half of 2011.
- Gold buying in the form of exchange-traded funds is rising. Launched in 2007, the total collection among seven fund houses is over 15 tonnes, nearly double the level a year ago.
- Large jewellery companies, such as Titan Industries, Reliance Jewels, Rajesh Exports and the state-run MMTC Ltd, are targeting the retail market with plans for hundreds of branded shops. They are hoping to attract sales from customers looking for a well-known name as a guarantee of quality.
- In 2009, India's gold market had its weakest year since trade was freed up in 1997. Record high prices and a failed monsoon meant imports fell 33 percent from the previous year to 480 tonnes, against an annual range between 600 and 800 tonnes in the previous five years.