Increase in gold exchange
The continuously rising prices of gold in the country have changed the purchasing habits of customers. Now instead of spending cash to buy new gold, people are preferring to exchange their old jewelery and buy new jewellery. According to jewelery traders, there has been an increase of about 60% in the transactions of buying new jewelery in exchange for old gold on an annual basis. High gold prices, import duty and economic uncertainty are rapidly boosting this trend.
According to ET report, Joy Alukkas, Chairman of the country’s leading jewelery retail chain Joyalukkas, said that the share of gold exchange program in the company’s total sales has now reached 65%, whereas earlier it was between 40-45%. He told that in a few days, up to 70% of the company’s business becomes the source of old gold exchange. At the same time, Kalyan Jewelers Executive Director Ramesh Kalyanaraman said that the share of exchange based sales in his company has increased from 30% to 40-45%. The company has also run special gold exchange campaigns after the Prime Minister’s appeal.
Impact of import duty and expensive gold
People associated with the industry say that this trend has become stronger after the government increased the effective import duty on gold and the sharp rise in gold prices. On Thursday, the price of 24 carat gold reached around Rs 1.56 lakh per 10 grams, whereas a year ago it was around Rs 1 lakh per 10 grams. In such an environment, buying new jewelery using the value of old jewelery has become a more convenient and cost-effective option for customers.
Gold kept in homes is becoming market power
India is among the world’s largest gold consumers. It is estimated that about 25,000 tonnes of gold is available with Indian families. Surendra Mehta, National Secretary of India Bullion and Jewelers Association (IBJA), says that gold exchange programs are helping in bringing the gold lying in homes back into the market. This can reduce dependency on new gold imports. India imports about 900 to 1,000 tonnes of gold every year. In such a situation, re-use of old gold can also prove beneficial for the country.
Tanishq, one of the country’s largest jewelery brands, is also promoting gold exchange. According to Arun Narayan, CEO of Titan Jewelery Division, about 4.4 lakh customers have exchanged 10 tonnes of gold in the last eight months. Market experts believe that if gold prices remain at a high level, the trend of gold exchange may increase further in the coming months. This can also change the format of jewelery business, where recycling of old gold will play a major role instead of new purchases.
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