With India importing 1,000 tonnes of gold a year to satisfy its domestic jewelry demand, ministers believe that approving the opening of colonial-era mines and others will serve to help reduce the country's huge foreign trade deficit which is boosted by gold imports. Indian officials are expected to auction licenses for new gold mines across the country in the coming months, and to revive long-abandoned mines. They hope around $4 billion worth of gold can be mined near the city of Kolar in the southern state of Karnataka, with more to come from other sites in the west and center of the country.
India is the largest consumer in the world of gold, bringing in 120 tonnes in August alone, with demand seen rising further ahead of the Diwali festival in October and the weddings season that follows it. Indian production of gold come to under two tonnes, with gold imports accounting for almost a third of the country’s trade deficit.