MUMBAI A new platinum contract was launched in India on Tuesday to serve a market where the head of the bullion association said imports could rise by almost half to 20-22 tonnes this year.
"There is good demand and people think platinum will outperform gold," said Anjani Sinha, director of the Indian Bullion Marketing Association, who also heads the National Spot Exchange Ltd (NSEL).
The NSEL launched a spot platinum contract, which will be available in as low a denomination as 1 gram, as well as a 100 gram contract aimed at jewellers.
India already has four platinum futures contracts.
"The option of physical delivery in coins or bars form in multiple locations makes the product all the more attractive apart from benefits like no storage issues," said Sinha.
Platinum is mainly used in automotive catalytic converters but its use in jewellery is also growing.
Platinum jewellery consumption rose 40-50 percent in 2011.
Sales at the Orra jewellery chain, one of India's largest platinum retailers, are up 30 percent, said Michelle Pinto, corporate communications manager.
"Platinum is gaining in popularity and sales have only risen," Pinto said.
One area where platinum has slipped is as an investment, losing its lustre hit after its prices fell below gold.
Indians imported nearly 1,000 tonnes of gold last year.
Spot platinum was selling at a discount of more than $80 to gold at around $1,572 per ounce on Tuesday.
Indian gold futures gained 32 percent in 2011, against 65 percent losses in the country's equity markets. Platinum fell 21 percent during that period, but analysts are now saying it could outperform gold over a 12-month period.
India's platinum market is still small and will take years to rival China, the world's biggest consumer of the metal. The country's legendary love affair with gold will also be hard to snap, although the government is determined to curb buying.
New Delhi doubled import duty on gold in its March budget as it tries to rein in gold imports to $38 billion in 2012/13 from $58 billion previously to ease the current account deficit.
Its excise duty hike triggered a strike by jewellers which has only just been called off on promises of a rollback.
India imported 15 tonnes of platinum in 2011 - just under 8 percent of total global supply. About half went into producing catalytic converters for cars and the balance into jewellery making, investment and industrial applications.
"Brand awareness is required. We need more advertising to make platinum products popular," said Mohammad Ashgar Ali, a sales officer at jewellery chain Tanishq, owned by Titan Industries.
(Additional reporting by David Lalmalsawma in NEW DELHI)