to support economic growth, he said.
Gold stocks of over 20,000 tonnes in the hands of millions of households are a strategic asset for India and policy direction should be formed by this, he added.
Somasundaram said: "However in the current quarter, demand in India has slowed down considerably due to various policy changes undertaken by the government to restrict gold imports."
The change in emphasis from restricting payment terms to linking import quotas to exports "is likely to create further confusion and aggravate the normal Q3 lull in Indian demand ahead of the Q4 festival and wedding season," the report said.
There could be dampening of Indian demand for jewellery over the coming months, more than normally expected during the usual Q3 slowdown, as the market digests import regulation changes, it said, adding that indications for the fourth quarter, however, so far remain positive.
However, it is interesting to note that price premiums in India have recently spiked again, suggesting that demand is healthy, the WGC observed.
"A good monsoon season so far also bodes well for demand later in the year, with the assumption that the market will by then have had time to digest and acclimatise to the recent restrictions imposed by the RBI," it said.
India depends on gold imports to meet its entire demand, which is expected to be between 900 and 1000 tonnes in 2013 calendar year, it added.