The All India Gems and Jewellery
Trade Federation (GJF), the national trade federation for the promotion and
growth of trade in Gems and Jewelry Industry across India, has written to the
Union Finance Minister Mr. P. Chidambaram and has strongly advocated immediate reforms as following:
1) Bring back SBLC and other credit buying of
gold. Advance payment or COD restrictions may be lifted;
2) Reduce import duty to 5%.
In a letter to the Finance
Minister, Mr. Haresh Soni, Chairman, GJF, said, “When the gold import is
restricted under 80:20 scheme, there is no way the import of gold is going to
mount until and unless there is a growth in overall exports. As such, we
request you to allow SBLC (Gold Loan) scheme for the jewelry manufacturers,
wholesalers and retailers. This practice was followed in the recent
past. However, this practice is prevalent in many countries due to the
volatile gold prices and also supports the jewelry manufacturers, wholesalers
and retailers in the way of working capital facility and as price hedging
mechanism.”
“Secondly, due to high premium
being levied on import of gold, there is a spurt of gold smuggling across the country
which the media has been reporting for quite some time now. We
assume that time is not very far that this sector will be governed by
unscrupulous people and anti-social elements. This parallel economy will damage
and ruin the basic fabric of this industry. Many entrepreneurs have spent money
in creating infrastructure for producing world class jewelry. Handling of
this jewelry sector in this manner will result in huge economic loss and
unemployment. In view of the above points, and as a responsible trade body, we
earnestly advocate above in the interest of trade and government,”
Due to shortage of raw material supply high premium
is being levied on gold import, moreover there is unavailability of custom
bonded warehouses at prominent locations within the country making it further
more difficult to procure raw material. Also due to shortage, unavailability
and high premium on raw material, artisans have become jobless and are
unemployed despite festive and wedding season which is the point of earning
livelihood for Lakhs of families associated with the trade. In the recent times it has also been noticed
that due to the higher duty gap in international and domestic market, NRI
business has been shifted to other potentially viable avenues. Several
prominent jewelers from across India has also conveyed about the sharp decline
in gold jewellery sales including sales of coins and bars as witnessed during
festive season in 2013…
West Bengal
Mr. Bacchraj Bamalwa, immediate past Chairman, GJF Regional Chairman
(also proprietor of Nemichand Bamalwa & Sons, Kolkata), said,
“Dhanteras 2013 was very bad and sales reported was 15-20% down in most areas
and 40-50% down in other areas. There was a wild fluctuation witnessed as gold
prices came down very sharply from Rs. 32,000 to Rs. 27,000 and then went up to
Rs. 33,000. People preponed wedding purchases to April and May during Akshaya
Trithiya. During festival season 2013, consumers restricted purchases to pure
symbolic ones. They preferred lightweight jewellery this festive season. Last
year, jewellers sold more gold coins but this year investment buying didn’t
really happen. Consumers were confused due to the negative publicity by the
Government urging people not to buy gold.” “The global trend reversed and the US
economy improved leading us to believe that gold prices wouldn’t increase. We
have seen one of the longest bull runs over last 10-12 years and correction
bound to happen. International prices are in the range of USD 1,900 to USD
1,300 and correction of 35% is expected. This is not reflected in domestic
prices. There is a supply crunch and premium zoomed to USD 100-120 from USD 2.
Since there is less amount of gold imported. 10% import duties and 10% premium
results in 20% price differential. Jewellers are not complaining about the
shortage of gold because the demand is not much. The premium is equal in grey
market and the imported channels. I am also not optimistic about sales
increasing during this long wedding season as many have bought gold jewellery during
April. If smuggling increases, it will destabilises economy,” Mr. Bamalwa
added.
Gujarat
Mr. Zaverilal V. Mandalia, GJF Regional Chairman –Gujarat, (proprietor
of Zaveri & Co.), said, “In Gujarat, we witnessed very few customers
during this festive season. In 2013, Akshaya Trithiya was the best period and
we doubled sales as gold prices were Rs. 26,000 as against Rs. 33,000. During
Dhanteras, sales dropped 50-75% in some areas whereas they were 40% down in
Gujarat State. During Diwali, consumers purchased mix and match jewellery with
a lot of plain and light weight gold jewellery. Gold supply is available at a
premium.
Tamil Nadu
Mr. N. Anantha Padmanabhan, GJF Regional Chairman – Chennai (proprietor
of NAC Jewellers Pvt. Ltd.), said, “This time, festive season was very very
poor. Consumers didn’t buy much jewellery except for light weight jewellery and
the fall in sales was around 40%. The reasons included high gold prices, bad
economy and inflation. People were spending more on onions. There was a premium
on gold and this is killing indigenous trade. Gold is being smuggled into India
and the organized sector jewelers are suffering. Casual purchase or impulse
buying is simply not happening.”
Mr. K. Srinivasan, GJF Regional Chairman - Rest of Tamil Nadu/ Kerala/
Pondicherry (proprietor of Emerald Jewel Industry India Ltd.) said,
“Festive season 2013 was a total flop as sales were 40-50% down as compared to
last year. There is no money and no business. Gold scarcity is a major problem
resulting in no raw material supply and price fluctuations are compounding the
problem. Diamond sales were regular and didn’t increase at all. Gold is
available at a premium.”
Karnataka/ Andhra Pradesh
Mr. GV Sreedhar, GJF Regional Chairman – Karnataka & Andhra Pradesh
(proprietor of Shree Rama Jewels), said, “Earlier, we used to see customers
flocking from 15-20 days prior to Dhanteras but this year we witnessed very
poor business. We sold only small ticket sized items and light weight
jewellery. Diamond jewellery sales were fairly good and so was silver
jewellery. There was no proper supply of gold and we didn’t publicise gold
coins. Metal supply is down and there is a premium USD 60-70 USD in gold. Gold
smuggling is rampant and it’s back to the Licence Raj.
Delhi
Mr. Vijay Khanna, GJF Regional Director – New Delhi (proprietor of
Khanna Jewellers), said, “Business was 30-40% down during this Dhanteras.
Gold jewellery did sell but only light weight jewellery was preferred. There is
a change now after Diwali and the market is improving but there is a shortage
of supply. We expect more diamond jewellery sales during the forthcoming
wedding season. Premium on gold is around Rs. 700-800 but it was at a high at
Rs. 1,500 during Dhanteras.”
Mumbai
Mr. Ashok Minawala, past Chairman and GJF Regional Director,
(proprietor of Danabhai Jewellers & Sons) said, “Things started
improving after Navratri but sales were generally down in different parts of
the country as compared to last year. Certain regional pockets did well inspite
of the slowdown. Sales for diamond jewellery were stronger and gave hope for
the wedding season. Price of gold played a very important role and it was
slightly on the lower side. With 10% hike in duties and overall 13-14% impact,
we are afraid of what will happen to the supply side during the forthcoming
long wedding season.”
About GJF: The All India Gems and Jewellery
Trade Federation (GJF) is the national nodal and the largest single trade body
in India for the promotion and growth of trade in gems and jewellery across
India. It represents over 6,00,000 players comprising manufacturers,
wholesalers, retailers, distributors, laboratories, gemologists, designers and
allied services to the domestic Gems & Jewellery industry. The Gems &
Jewellery industry is a hand crafted and labour intensive with over 1 crore
strong labour force engaged in the manufacturing of jewellery industry in the
domestic sector. The industry size is estimated to be in the region of Rs.
4,00,000 crore. The Federation’s mission is to support and promote the progress
and prosperity of all the members in the gems and jewellery industry across
India. It also provides regular news updated on notifications, rules and
regulations declared by the Government. It promotes the trade, by participating
in promotional events on a national level. It encourages the trade through the
organization of consumer exhibits in India. It also counsels educational and
research institutes that help in developing superior quality and high standards
for effective functioning of the trade.
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