“Industry trying to work hand-in-hand with Government” – Prithviraj Kothari
How has the new gold import and government policies impacted the bullion and jewellery market? What is your opinion about the new policies?
The impact on the market has been comprehensive. Not only Zaveri Bazaar but the entire gems and jewellery industry has been worst hit due to import policies. The gold imports have come down and jewellers are facing shortage of gold supplies. The curbs on gold imports have impacted the exports too. There is a good demand for Indian jewellery abroad but due to stringent Government policies, jewellers are unable to export the jewellery. The imports of gold have gone down by 85 per cent. Once upon a time, we used to import 80 tonnes monthly but now the number have come down to 15 tonnes monthly. When there is no gold in the market, how can we make jewellery? Hence, it’s obvious that the exports will be affected.
The bullion markets are down; due to shortage of gold many workers in the industry are jobless. The gold premiums are also impacted due to the policy. Jewellers are forced to buy gold at high premiums. However, not all jewellers are capable of buying gold at high premiums hence they are resorting to illegal ways of acquiring gold. The number of smuggling cases registered at the international airports is rising. The money which was used for other monetary gains of Government is now used in unfair trade practices.
Agencies and banks are also unable to deliver the required gold due to import policy. Government is unable to focus on replenishment ways that helps jewellers get access to gold easily. Government has also imposed restrictions on Gold ETFs, due to which jewellers are unable to come up with new units. With the prevailing conditions, India is also losing its position as number one gold consumer to China, which has registered good demand for gold in 2013. Government has also forgotten about the gold deposit scheme.
Who is responsible?
Government, who else? The 80:20 scheme was introduced, making it compulsory to re-export 20 per cent of the total gold imports. The major setback of this scheme is that until and unless there is gold export of 20 per cent you are not permitted to import gold second time. It is even more difficult to get the imported gold from the customs department. The imposition of the new policies is still debatable topic in the Government. Official paperwork has become tough; importers are unable to submit the documents due to the ongoing confusion.
Government never concerned The Bombay Bullion Association of India, a well-known trade body that looks into the matter of jewellers before imposing the gold policy. To decrease the Current Account Deficit (CAD) of the country, Government targeted the gold industry. Gold import duty hike was the biggest mistake of government due to which gold smuggling has started in India. No department is willing to take the responsibility for the unwanted policies imposed by the Government. However, Government all alone cannot be held responsible for the current market; there are many others in the industry who have been misusing the rights given to them as well.
What is the solution for this?
According to me, Government should give gold stature of currency note. Secondly, the gold market should be made transparent. Import duty should be zero, no matter how much ever import duty is being imposed, people will continue to buy gold. Hence, it’s better for the policy makers to think carefully before imposing any new change. They should take help of associations to come up with good solution for improving the market conditions. Before imposing new policy they should share a circular with the different associations and bodies to create awareness about the changes among the gems and jewellery industry. Existing policies should be made clear and they need to cut import duty.
But, policy makers are not in favour of curbing imports. Please comment.
Jewellers are silent because the measures are imposed to control the widening CAD. So far, we are observing the actions of Government, CAD is under control right now, and we are waiting for the Government’s move. But, if there is no action for long time, then we might protest against them. As of now we are trying to work hand-in-hand with the Government.
What is your opinion about the work of The Bombay Bullion Association in 2013?
BBA has achieved a lot in 2013, which has never happened in last 10-15 years. However, members are unable to utilise the facilities to full extent because of number of reasons. One of them being, BBA is still working on business model to help the gems and jewellery industry to the fullest. To encourage gold loan, BBA is trying to associate with known personalities. We want to work with Government, not against them.
Why is India lacking in product branding? What is your opinion about Zaveri Bazar Jewellery Festival?
People are yet to adopt new methodology in product branding. They are used to working traditionally. However, gradually jewellery will start looking at the advantages of product branding and start adopting it. About festival, I feel jewellers should participate freely in the Zaveri Bazar Jewellery Festival. The festival will help both business and jewellers in long-run.