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India’s gold production can rise to 20 tonne per year: Report

India is one of the world’s largest consumers of gold

India’s gold mine production has the potential to reach 20 tonne per year, up from 1.6 tonne in 2020, if legacy hurdles are reduced considerably and investments are encouraged, according to a report by the World Gold Council.

As per the market development organization for the gold industry, despite India being one of the world’s largest consumers of gold, the mining market operates on a small scale and is not an easy one to enter.

The council in a report titled ‘Gold Mining in India’, said that India’s current resources, when compared to production and resource levels in other countries, could reasonably be expected to support annual output of approximately 20 tonnes per year in the longer term.

Should such a level be reached, it would generate almost $50 million in revenue per year for India from royalty payments at current gold prices. The WGC added that royalty rates from primary gold production in India are set at 4% of the London Bullion Market Association (now known simply as LBMA) gold price. This would also provide direct employment for an estimated 3,000-4,000 people in addition to those currently employed in the industry.

Somasundaram PR, regional CEO, India, World Gold Council, said, “Given that India is one of the world’s largest gold consuming countries, it makes sense for it to develop mining capacity. But change is needed for this to happen, legacy hurdles must be reduced considerably, and investments encouraged. There are promising signs in recent years with the changes to the Mines and Minerals (Development and Regulation) Act and introduction of National Mineral Policy and National Minerals Exploration Policy. If this trend continues India’s, mine production is expected to increase in coming years."

The report also identified three problematic areas in the development of gold mining.

First are regulatory challenges, as the report highlighted that the process of securing approval for a mining license is usually lengthy, involving multiple agencies and requiring 10-15 approvals for a single license.

Second are taxation policies. The Indian government has reduced taxation on corporate profits over the last few years. However, import tax on mining equipment and other direct and indirect taxes remain high compared to other countries.

Lastly, many of the key gold mining areas are in remote locations in states with poorly developed infrastructure.

However, as per WGC, in recent years the Indian government has proposed and implemented various policy changes to help develop India’s gold mining sector by addressing the most problematic areas.

The policies include an amendment to the Mines and Minerals (Development and Regulation) Act 1957 (MMDR) in 2015, the National Minerals Exploration Policy (NMEP) in June 2016 and the new National Mineral Policy in 2019.

The report also highlighted that India’s current defined gold reserves (as per data published by the Ministry of Mines) totalled 70.1 tonnes, with 88% of reserves in Karnataka; 12% in Andhra Pradesh and an insignificant amount (less than 0.1 tonnes) in Jharkhand.

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