Bangalore: The precious metal, gold, has not discouraged buyers in India where the demand is expected to touch 1200 tonnes in 10 years, according to World Gold Council (WGC) instituted study.

Private gold demand will grow at least at three per cent per annum over the next 10 years and based on total Indian demand of about 900 tons for fiscal 2009-10,Mumbai based Centre for Monitoring Indian Economy (CMIE), an independent economic think-tank estimate demand to reach 1200 tons or approximately Rs 2.5 trillion at current price level by 2020-21.

The survey report compiled by CMIE was released at a press conference here by WGC after its Board Meeting.

Factors increasing the demand were a robust 10 per cent annual GDP growth, rising incomes and savings level.

According to CMIE, the savings rate of Indian households is likely to be close to 50 per cent rather than 35 per cent as suggested by official statistics. This means gold investments as a percent of total savings are about 36 per cent.

The fact that Indian gold jewellery and investment demand remains robust, despite the rising price emphasises enduring desire among local consumers to purchase gold, driven mainly by its allure as jewellery and its properties as hedge to offset depreciation effects and erosion of savings and income, it said.

Currently India and China together account for nearly 25 per cent of annual gold demand and it is likely to grow further as a proportion of demand in years to come.

In 2009, demand for gold in India touched 963 tonnes, Ajay Mitra, Managing Director of WGC, India and Middle East said.

China, though engaged in mining gold, imported 500 tonnes last year and would continue to do so in the coming years to meet the growing demand, Grubb said.

The rising prices of gold has also thrown challenges to jewellers as new types of jewellery are entering the market, he said and urged those in the industry to look for new products and solutions to attract younger generation.

(Agencies)