Mumbai: Gold sales may fall almost 30% this festive season from a year ago due to import restrictions, say jewellers.

“Gold jewellery sales were lower by 30% as compared to last year for Onam," said Mehul Choksi, chairman of Gitanjali Gems Ltd, who expects sales volumes for the entire festive season to be lower by 30% this year from a year earlier.

The festive season, which began with Onam, accounts for 20-25% of the overall gold and jewellery market, according to Choksi.

Other jewellery traders concur.

“Due to the restrictions on gold imports, there is not much new jewellery in the market because of which sales in the September quarter have been slow," said Sanjeev Bhatia, chief financial officer at PC Jewellers Ltd.

Gold consumption in India, which imports almost all the bullion it uses, accounted for 20% of global demand in 2012, according to data from the World Gold Council. Indians imported 950 tonnes of gold in fiscal year 2013 that was valued at $55.7 billion, creating a huge trade deficit of $190.91 billion, according to a 17 September report in The Telegraph newspaper.

On 13 August, India raised the tax on gold imports from 8% to 10%, to curtail gold demand and tackle the record current account deficit that also weakened the rupee.

The higher taxes and tighter rules on financing imports have reduced demand. Inbound shipments of gold are seen at 800 tonnes in the 12 months through March, compared with 845 tonnes a year earlier, said a 1 October Bloomberg report.

To be sure, jewellers have begun exploring alternatives to address poor sales.

While some are promoting diamond jewellery as an option, others are offering fixed deposit-like schemes for gold, while trade associations are even asking the apex bank to nominate them as agents to collect unused and idle gold from households and temple trusts, to overcome the restrictions and meet demand in India—the world’s largest jewellery market.

At Gitanjali Gems, for instance, which has brands like Nakshatra, Gili and Asmi, the focus will be on moving consumers to diamond jewellery, said Choksi.

The company has also launched a scheme for its customers, TBZ Gold Plan, where consumers can keep their gold coins and bars with the jeweller as a fixed deposit that can be used in the interim to make jewellery. Consumers will get back 105 grams after 12 months if they deposit 100 grams with the jeweller.

Meanwhile, the All India Gems and Jewellery Trade Federation (GJF), a trade association of gems and jewellery traders, is in talks with the government and the Reserve Bank of India (RBI) to devise ways to reduce dependency on imports. GJF has submitted a proposal to RBI called the Rashtriya Swarna Scheme to discover alternative sources of gold. In its proposal, GJF has asked RBI to allow jewellers to work as nominated agents of the apex bank to collect unused and idle gold from households and temple trusts. If this proposal goes through, GJF expects to make India free of gold imports for domestic consumption in three years.

“There is 25,000-35,000 tonnes of gold with public and private trusts of which we estimate at least 10% to be idle gold, which people have bought for some savings or investments purpose," said Ashok Minawala, past chairman of GJF. “If we can get people to deposit this gold with jewellers instead of banks that can then use it to make jewellery and, in return, provide consumers with similar or better facilities than banks in terms of returns on investment, insurance, it will help reduce our dependency on imports."

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