India’s annual gold production could surge from just 1.6 tons to 20 tons if the government removes red tape and encourages investment in the sector, the World Gold Council (WGC) said in a report released on Thursday.
The South Asian country is the second largest consumer of the metal in the world and imports most of its needs. Higher local production could help New Delhi limit imports.
India spent a record $55.7 billion on gold imports in 2021, buying 1,050 tons – the most in a decade and far more than the 430 tons imported in 2020.
“It makes sense for India to develop mining capacity. But it will require change, significant breaking down of old barriers and encouragement of investment,” said Somasundaram PR, regional chief executive officer for WGC’s Indian operations.
In India, obtaining a mining license is a lengthy process that requires approvals from multiple agencies, discouraging investment, particularly from multinationals, the council said.
Most gold mining areas are located in remote locations with poor road and rail access, making transportation of materials to and from the sites difficult and expensive, the report said.
Hutti Gold Mines currently employs more than 4,000 workers and contractors in the southern state of Karnataka and accounts for the majority of production in India.
Gold mining could employ another 3,000 to 4,000 people, but it needs to attract more than $1 billion in investment to convert resources into reserves and ultimately build mines, the WGC said.
