India's gold imports are likely to come down by about 5% in the coming 12 to 18 months as a result of government initiatives such as the Gold Bond Scheme (GBS) and the Gold Monetization Scheme (GMS), according to rating agency ICRA.

It said that the overall impact of the GBS and GMS schemes is likely to be "moderately positive" for the country's gold imports.

India imports about 800 to 1,000 tonnes of gold annually and is the world's second largest consumer of the yellow metal.

To curtail the import of the precious metal, the government recently gave its nod for the implementation of the GBS and the GMS. Both the schemes are aimed at reducing investment demand for gold and also mop up idle gold lying with households and institutions.

"While we expect the GBS scheme to be relatively successful, the impact of GMS is likely to be limited because of concerns regarding the operating modalities of the scheme," NDTV Profit reported, citing a ICRA report .

ICRA expects that "the low interest rate expected to be on offer under the GMS is unlikely to compensate for the loss of jewellery (financial cost) through melting, owing to the strong emotional quotient attached to the shiny metal."

Earlier in May, Japanese brokerage Nomura had said that the success of the Modi government's proposed gold monetization scheme depends on paying higher interest rates to customers and waiving regulatory norms for banks.

ICRA said that the bond scheme is a more attractive proposition. 

"GBS, on the other hand, provides an alternative avenue for channeling investments into the commodity in addition to generating some additional returns against direct investments into exchange traded funds (ETFs) or gold bars, where returns are linked to price movements alone," it said.

The agency expects the collections under GMS to remain "modest" as the sourcing is likely to touch 10-15 tonnes over the next two to three years, accounting for a fraction of 20,000 tonnes of gold held by households.