With the new BJP-led government laying propositions to check on black money, the gem and jewellery industry players believe that the government will definitely come up with ways to check the illegitimate means of bringing gold into the country.
“If there is an import duty cut, gold prices sooner will hover in the range of Rs 26,600-Rs 27-700 per 10 gms,”
added a city-based bullion trader.
“This is the reason the jewellers are selling gold bars on discounted prices just to clear the existing inventory,”
said Kaushlendra Singh Sengar, chairperson, Incubators Group.
Vinod K Jhaveri, CEO, VKJ Advisory, from Vadodara talking about other possible factors worrying the jewellers said, the Reserve Bank of India (RBI) has also announced the swapping of old gold with 99.99 per cent purity variety thinking that is an impure variety lying in its vaults.
“The flow of gold will increase in the market till RBI starts buying to replace it,”
With expected economic turnaround, people might not be glued to gold as an asset for investment going forward except during an emergency like the recent Iraq crisis and this is a reason for the jewellers to worry , views another expert.
The last few years have been very eventful for the gem and jewellery sector as the erstwhile government not only increased the import duty to 10 per cent from 1.1 per cent on several tranches but also imposed various restrictions to curb the use of the yellow metal.
The biggest problem of any retailer in the country is the 80:20 rule imposed by the UPA II government last year.
Under this rule, the government had allowed nominated agencies to import gold on the condition that 20 per cent of the import would be exported. CAD was a problem so the RBI had to put several restrictions.
The second problem is the non-availability of the gold and at present the margin is quite high.
Ravi Kapoor, MD and CEO, Kays Jewels , reiterating others said,
“Our expectations with regards to gold import is abolition of the 80-20 scheme. This is encouraging ridiculous premiums being charged by canalizing agencies and bullion dealers. The Government should reduce duty on gold to curb smuggling.”
While Subir Sen, Director, BC Sen Jewellers, explaining further , said,
“We expect the new government to bring the import duty back to two per cent from 10 per cent at present. It will also help the customers as they will get the benefit when the jewelers pass on the benefits to them.”
He further added,
“The government should take measures by which import can be made hassle-free. Let the industry become transparent first and then the government should look at developing the gem and jewellery sector.”
Others like Suvro, Joint Managing Director, P C Chandra Jewellers, a part of the PC Chandra Group, feel the government should look at this sector seriously as many small players are engaged here.
“We look forward to some support and relaxation in rules which are bottlenecks for the industry as a whole now. We have high hopes.”
“We hope the new government would implement measures to control the dollar rates and remove the selling difficulties faced by the businessmen, improve gold imports keeping gold exports in mind. Also the old gold loan facility measure should be rethought by the government. In the end, to be able to run business smoothly is every businessman’s expectation.”
On the other hand Shreyansh Kapoor, Vice President, Kashi Jewellers, said,
“The new government should formulate policies to promote gold as an investment, as more than 1.5 crore to 2 crore people are employed by the gem and jewellery industry,”
The business industry wanted a stable government and the BJP government is pro-community, pro-people and pro- business, said Manoj Seth, a gold analyst.
Thursday will show whether this 40-day old government is for the gem and jewellery sector or against like the UPA II government which did not leave any stone unturned to slam the industry,”
concluded an expert.