India has a rich heritage of gold mining, but the industry’s growth has been hampered by legacy processes and under-investments, says World Gold Council.
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.
In 2020 gold mine production was just 1.6 tonnes. 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, the report titled ‘Gold Mining in India’, said.
Somasundaram PR, Regional CEO, India, WGC, 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 highlights three problematic areas in the development of the gold mining namely regulatory challenges, taxation policies and infrastructure.
“The process of securing approval for a mining licence is usually lengthy, involving multiple agencies and requiring 10-15 approvals for a single licence. Applications are often subject to substantial delays, leading to lengthy and costly hold-ups in project development,” the report said.
Noting that many of the key gold mining areas were in remote locations in states with poorly developed infrastructure, the report said “inadequate road and rail links can make moving materials to and from sites difficult and costly. As a result, there has been limited investment in gold exploration over the past 15 years.”
“High import taxes increase capital cost and deter development,” it said.
In recent years the Centre has, however, proposed and implemented various policy changes to help develop India’s gold mining sector by addressing the most problematic areas outlined.
