The jewellery industry has renewed its plan of tapping idle gold lying with consumers in the country to meet rising demand for the yellow metal and cut its dependence on imports.

There are a few changes in the renewed plan, though. One, the industry now calls the gold deposit scheme as gold monetisation scheme. Two, there is new “enabler” of the scheme now in the form of MMTC Pamp refinery.

The scheme, floated under the auspices of the Gold Jewellers Federation of India, is aimed at tapping some 25,000 tonnes of gold believed to be lying idle in the country with consumers. India holds nearly 11 per cent of gold stocks above the ground in the world.

Addressing a press conference here at the 11th India International Gold Convention – 2014, MMTC Pamp Refinery Managing Director Rajesh Khosla said that though it was ready to take on the mantle for the monetisation scheme, it would, more importantly, provide a platform for the plan.

Providing a platform “We will collect, assay, transport, refine and re-transport gold to manufacturers if the scheme takes off,” Khosla said.

The plan, like last year, is to tap gold jewellery, coins and bars lying idle with consumers. The bullion can be deposited with a nodal agency and in turn, the consumer can opt to get either gold or cash after the expiry of the term for which it is offered.

Last year, the gold deposit was supposed to have made for a three-year term with customers getting back the gold with a three per cent annual interest. The low interest rate and the reluctance of the Finance Ministry were then seen as rendering the scheme a non-starter.

This time around, Khosla said, MMTC Pamp’s offer could swing things in the industry’s way. “Besides, the Government is keen on doing something to cut dependence on imports,” he said. “The Government wants jewellers to come out with some plans, no doubt. But when we go to them with our plan, they find fault and ask for modification. The issue is getting dragged,” said a Mumbai-based jeweller.

Khosla and Rujan Panjwani, Executive Director, Edelweiss Financial Services, were unwilling to fix a time-limit for the scheme to be launched.

“We have proposed the concept to the Government. We will have to involve banks, the RBI and the Finance Ministry. At this stage, we are explaining to the Government how the scheme will work,” Khosla said. “The good thing about this is that engagement with the Government has begun” Panjwani said.

Old wine? “Such scheme has been in vogue from 1999 but we have been successful in tapping only less than 15 tonnes so far,” Khosla said.

Banks, especially the State Bank of India, had floated the scheme in 1999 providing tax benefits. But the scheme failed to yield results since, according to Khosla, it was aimed at temple trusts and not consumers.

“The minimum quantity with the scheme was 500 g but now we say, consumer can give as low as 50 g. Perhaps, even lower,” he said. Panjwani said banks should be incentivised to such a scheme. “The Government can come up with more tax incentives,” he said.

MMTC Pamp’s objective of being enabler for the scheme stems from the fact that it is keen to utilise its capacity to refine 300 tonnes of gold annually.

“Dore imports cannot help utilise our capacity. Therefore, we are looking at scrap gold and we think the monetisation scheme will help,” Khosla added.

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