According to the latest data released, the demand for gold increased 41 per cent to 262 tonnes during the third quarter from October to December, 2012.

The demand strengthened in the country even as the prices of gold remained high. The high demand is a concern for the finance ministry, which is aiming to limit the import of the shiny metal into the country in order to control the current account deficit. The finance ministry and the country's central bank, the Reserve Bank of India (RBI) have said that gold import is a key concern and the government is planning to increase the import duty to 6 per cent.

Industry players have said that the increase of 50 per cent in the import duty will deter small and marginal consumers from buying gold in the country. The Gems and Jewellery Export Promotion Council (GJEPC) has said that the government should discourage investment in gold bullion, medallions and bars that are sold through the financial institutions in the country.

The demand in the country has remained strong and the latest data from the World Gold Council shows that India has remained the largest market for gold and it has also emerged as the fastest growing market.