Bengaluru: A digital revolution is reshaping India’s $34 billion gold market, with smartphones, e-wallets and flexible investment schemes drawing new buyers into a business dominated by traditional, face-to-face transactions.
Digital payment systems have ballooned in popularity since the government scrapped large-value bank notes in 2016.
Among these offerings are applications that enable smartphone users to buy, sell or store gold — even in small amounts — kept in secured vaults operated by MMTC-PAMP India Pvt Ltd, a joint venture between MMTC Ltd, the largest national trading firm, and Swiss gold refiner PAMP.
Although online gold purchases have been growing globally for years, they are a relatively recent phenomenon in India, where jewellery and bars of the precious metal tend to be kept in hand and given as gifts.
“In India, the action is really starting now. The digitisation of the economy will certainly lead to digitisation of gold,” said Somasundaram PR, MD of World Gold Council’s (WGC) India operations. “It is poised for significant growth, possibly in the next 12-24 months.”
The WGC estimated total Indian gold demand at 727 tonnes (25.6 million ounces) in 2017, and could be up to 800 tonnes in 2018. In China, the top consumer, 2017 demand was 953.3 tonnes.
It is difficult to gauge how many new buyers are entering the market because of online access.
Digital payments firm Paytm said that in the first six months after it began offering digital gold last April, it facilitated about $18.4 million worth of sales — a tiny fraction of the Indian gold market.
With the vast majority of purchases made in the traditional way, demand for physical gold isn’t abating, “especially when physical gold plays an important role at weddings,” said Naeem Aslam, chief market analyst at Think Markets UK Ltd.
Besides convenience, consumers are attracted to competitive pricing and ability to make purchases in tiny increments. Gold-based financial offerings, including Gold Accumulation Plans, allow users to buy and store gold in fractions as small as 0.1 grams — an amount that would be an uneconomical to trade physically because of the associated handling costs.
