NEW DELHI: The first tranche of sovereign gold bonds that closed on November 20 received an encouraging response despite falling gold prices, suggesting that the scheme may be successful in reducing imports of the metal. The scheme, which opened on November 5, received 63,000 applications for 917 kg of paper gold worth Rs 246 crore. "Excellent response for an innovative product," Economic Affairs Secretary Shaktikanta Das tweeted.Gold is trading close to a six-year low. The finance ministry said the success augured well for the next set of gold bond sales and announced tweaks to improve the appeal of the struggling gold monetisation scheme. "It may be noted that this overwhelming response has been received from retail investors who are focus of this scheme," it said in a release. "The positive response to this new and innovative saving instrument has elicited response from across the country and it is expected that subsequent tranches will continue to receive such enthusiastic response."The Reserve Bank of India had pushed the settlement date forward by four days following the enthusiastic response. "This is a good beginning," said Sunil Kumar Sinha, principal economist at India Ratings & Research, adding that the amount is small in the context of India’s gold imports. "The government will have to do more to market it to popularise it." He said the investment has come from the informed investor.Finance Minister Arun Jaitley had announced the launch of "a sovereign gold bond, as an alternative to purchasing metal gold" in his February Budget. The government had, along with the bonds, also launched a gold monetisation scheme to get domestic holdings of the metal into circulation. The government announced some changes to the latter on Friday to get more people to sign up for it.India imported $34 billion of gold in FY15 despite high duties and restrictions imposed in 2012 after current account deficit worsened to 4.7 per cent of gross domestic product in FY13. Gold imports added up to $53.8 billion in FY13.The country imports almost 1,000 tonnes of gold every year, a reasonable percentage of which stems from investment demand. The sovereign gold bond scheme is aimed at discouraging this investment demand. Duty on gold imports is levied at 10 per cent.The first tranche of bonds was to be issued on November 26, which has been now extended to November 30 by RBI. The bonds are being issued by RBI on behalf of the government and will constitute part of the latter’s overall borrowing. Bonds are denominated in multiples of 1 gram of gold and have an eight-year maturity with an exit option from the fifth year onwards. Minimum permissible investment is 2 gms of gold and the maximum is 500 grams per person per fiscal year.Investors will get an annual fixed rate of 2.75 per cent payable semi-annually on initial value of the investment. They will also get capital gain if price of gold appreciates while holding the bonds. Capital gains will be taxed as in case of physical gold holdings.TWEAKS IN GOLD SCHEMEThe government announced some changes to the gold monetisation scheme, which had received a lukewarm response, to make it more attractive and widen its reach. Depositors will now be able to give their gold directly to the refiner without involving collection and purity testing centres wherever it is acceptable to banks.The move is aimed at encouraging bulk depositors such as Hindu undivided families and institutions to participate in the scheme. Fees levied by banks for testing, transporting, refining and storage services at collection centres and refiners will be reimbursed based on actuals.A circular is being published to clarify that exemptions on income tax and capital gains tax would be available to the scheme’s customers, the finance ministry said in a statement. The Bureau of Indian Standards is expected to complete the registration of 55 collection and testing centres by December.Economic Affairs Secretary Das and RBI officials will meet on Saturday to further review the scheme.