Demand for gold exchange
After the increase in import duty on gold, a big change can be seen in the jewelery market of the country. Experts believe that amidst the rising cost of gold, Indian families can now bring out the old gold lying in their safes in the market. This is likely to accelerate activities like gold exchange, sale of old jewelery and gold loan. Businessmen associated with the jewelery industry say that due to high prices and increased duty, the demand for new gold may fall by 10-15%. In such a situation, people will give priority to buying new jewelery by selling or exchanging old jewellery.
In the ET report, Bhima Jewelers Chairman B. Govindan said that a large quantity of old gold is expected to come in the market in the coming time. He says that due to expensive gold, the inclination of customers will increase towards using old jewellery. Chairman of India Bullion and Jewelers Association, Surendra Mehta also agreed that the impact of increased duty will be clearly visible on the market. He said that people can increase taking gold loans against jewelery to meet their cash needs. Besides, there will also be a danger of increase in gold smuggling. According to him, earlier when import duty was high, about 100 to 120 tonnes of gold used to reach India through illegal routes every year.
There is a lot of gold lying in the safes
According to estimates, Indian families have about 25,000 tonnes of gold, a large part of which has been lying in safes for years. If even a small part of this stock comes into the market through recycling and formal trading, then the country’s gold import can reduce significantly. This will also reduce pressure on current account deficit.
Industry experts believe that by promoting low carat jewelery like 14 carat and 9 carat, gold imports can be reduced by 20-30%. At the same time, reducing investment in gold bars and coins will also help in reducing imports. Varghese Alukkas, Chairman of Jose Alukkas, says that after the increase in duty, customers may show more interest in taking cash by selling old jewellery. Interestingly, almost half of the sales of big jewelery retailers are now happening through exchange of old gold.
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