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Recycling gold: why is scrap gold such a major industry in India?

Published Wednesday 4th May 2016

The old, broken and unwanted gold that you sell for recycling in the UK has a new life in gold jewellery or as part of the hi-tech circuitry in mobile phones and computers.

But in India, it’s a different story. There’s a drive going on in India to persuade more people to recycle the old gold they have stored at home or gold that is kept in temples. It’s all part of the Indian government’s efforts to meet the demand for bullion, without having to pay duty on importing more and more of the precious metal.

One of the ways India is doing this is through gold buying schemes at approved banks, and much of the bullion that is brought in goes towards creating more collectible gold to be sold to investors.

Last year, India recycling a massive 80.2 tonnes of gold, and much of that was collected thanks to the schemes urging people to part with precious metal they had hidden away at home.

But that’s still the tip of the iceberg when it comes to demand for gold in India. The World Gold Council says that the country bought 849 tonnes of the precious metal in 2015, up from 828 tonnes the previous year. And demand was especially high in the last three months of 2015, when 233 tonnes was bought.

The Indian government is so keen on recycling gold because of the high import taxes it has to pay to bring bullion into the country. Earlier this year, it tried to pass some of that cost on to the jewellery industry by imposing a tax on gold items. That didn’t go down well with jewellers who staged a strike over the new payments.

Although the UK doesn’t have the same import demands for gold as India, which after China is the world’s second biggest gold buyer, it’s a smart move to recycle gold that you don’t want or need any more. And with the current strong prices for the precious metal, you might be able to earn yourself a nice little nest egg while you're at it.