India has the largest gold market in the world, but the domestic production of gold has been negligible all these years. The country produces about two tonnes of gold annually.Till 1991, practically all gold import to India was through smuggling!
Even though millions of Indian people live in poverty, India is the world’s largest consumer of gold. Not just a luxury for the rich, every family acquires and gives gold on special occasions. From a bride’s wedding ornaments to a baby girl’s first gold earrings or the gold grain placed in the mouth of a deceased loved one, gold is the touchstone of status and security in Indian culture.
The perpetual demand for gold, which India does not produce on a large scale is a major drain on the economy. Higher incomes, thanks to economic reform, have boosted the demand, but a drop in gold production around the world has forced prices up and high duty on imported gold has Indians turning to smugglers to satisfy their obsession.
