Gold demand in the country declined by 14 per cent to 842.7 tonnes in 2014 as compared to the previous year, mainly due to government policies putting restrictions on imports, according to the World Gold Council (WGC).
The overall demand for the yellow metal stood at 974.8 tonnes in 2013, says a WGC report titled 'Gold Demand Trend 2014'.
In value terms, the demand for gold dipped by 19 per cent to Rs 208,979.2 crore in 2014 as compared to Rs 257,211.4 crore in 2013, the report said.
The total jewellery demand in the country for the last year was up by eight per cent at 662.1 tonnes as compared to 612.7 tonnes in 2013. In value terms, domestic jewellery demand in 2014 stood at Rs 208,979.2 crore, a fall of 19 per cent from Rs 257,211.4 crore in 2013.
Total imports of the precious metal stood at 769 tonnes, including grey market, as compared to 825 tonnes in 2013.
"The grey market gold supply was around 175 tonnes. If there are relaxation in policy, duty cuts and transparent pricing this year, the grey market supply of gold will be significantly reduced," WGC Managing Director, India, Somasundaram PR told PTI in the financial capital.
Total investment demand for 2014 fell by 50 per cent at 180.6 tonnes as compared to 362.1 tonnes in 2013. In value terms, gold investment demand registered a decline of 53 per cent at Rs 44,847.1 crore from Rs 95,460.8 crore in 2013, the report said.
"The investment demand declined mainly due to government policies that led to jewellers not selling bars and coins," Somasundaram said.
Total gold recycled domestically also declined by 23.5 per cent in 2014 to 77.1 tonnes as compared to 100.8 tonnes in 2013.
Softer bullion prices, which remained stable in 2014, provided less incentive to sell the yellow metal, Somasundaram said.
"India's overall gold demand was slightly lower in 2014, which is not surprising given the crippling restrictions on imports in place for most of the year. This had the biggest impact on investment demand.
"In contrast, festival buying, bridal demand and a general upswing in economic sentiment led to eight per cent growth in demand for jewellery - a record high from 2013.
"The year also saw high levels of smuggling as a direct result of supply curbs on the Indian gold market," Somasundaram said.
Gold demand in Q4 of the 2014 calendar year grew marginally by two per cent to 223.2 tonnes as compared to 218.7 tonnes in the corresponding period of 2013.
In value terms, India's Q4 2014 gold demand saw a fall of four per cent at Rs 53,342.6 crore as compared to Rs 55,664.3 crore in same period of 2013.
However, total jewellery demand was up by 19 per cent in Q4 2014 at 179.1 tonnes as compared to 150.7 tonnes in 2013. In value terms, jewellery demand was at Rs 42,803.1 crore, a gain of 12 per cent from Rs 38,356.7 crore in the same period of 2013.
Total investment demand was down by 35 per cent at 44.1 tonnes as against 68 tonnes in Q4 of 2013.
In value terms, gold investment demand stood at Rs 10,539.5 crore, a drop of 39 per cent from Rs 17,307.6 crore in 2013.
Total gold recycled in the country in Q4 2014 was 21.2 tonnes, up from 17.3 tonnes in Q4 2013.
Going forward in 2015, Somasundaram said the demand is likely to be at 900-1,000 tonnes on the back of an improving economy and better gross domestic product (GDP) projection.
"We expect the demand to be around 900-1,000 tonnes in 2015. This is mainly due to the overall improving economy and better GDP projection.
"When the income increases and there is extra money, some part of it usually goes into buying gold," the MD added.