Series of anti-Gold moves take toll on India jewellery industry

Isa Bullion - Series of anti-Gold moves take toll on India jewellery industry

High taxes also contributed to hike in gold smuggling in to the country as a kilogram of gold cost nearly a lakh of rupees more in India when compared to centers like Dubai.

World's largest gold consumer, India's gold sector continued to suffer from various anti-gold measures taken by the government and the central bank.

Latest move in this regard, decision by banks to withdrew EMI schemes on credit card purchases for gold, has affected online sales of the yellow metal as it fell 20 per cent in just two days, analysts said.

They added that the move will surely hit virtual jewellers in the country as nearly 20 percent of their sales were taken place through online.

Without facilities like easy payment options, home delivery consumers might be discouraged to buy jewellerys from shops.

Lack of raw materials for manufacturing jewellery products had already posed challenges to country's gems and jewellery sector, said All India Gems and Jewellery Trade Federation.

They said the scarcity of gold is due to the increase of import duty to 8 percent by the government as this has made the acquisition of gold much costlier in the country.

Industry have also said that banks have stopped importing gold due to which there is a supply shortage in the market. Bullion dealers are selling stock of gold at a high premium at the moment.

They however said plunging rupee did not affect the industry so much as they are making payments in dollars.

The Federation also blamed bullion dealers for the debacle in the sector as they were asking for high premiums in the local market.

High taxes also contributed to hike in gold smuggling in to the country as a kilogram of gold cost nearly a lakh of rupees more in India when compared to centers like Dubai.

India exported $39 billion worth various precious gems and jewellery in the fiscal 2012-13. It is expected that due to tightening on imports of gold, the jewellery exports from India may decline by up to 15 to 20 percent in the current financial year.

courtesy of bullionstreet