| MUMBAI/NEW DELHI
MUMBAI/NEW DELHI Nov 1 A scarcity of gold and
high prices are pushing Indians to look to silver or diamond
jewellery as alternative gifts this festive season, adding to
the gloom in the gold trade after government measures to
Indians are the biggest buyers of gold in the world and many
believe that buying and giving it on holy days brings good
fortune. Friday marks Dhanteras, a huge festival associated with
Lakshmi, the goddess of wealth, and another festival, Diwali,
falls on Sunday.
"So far, we have sold just two gold rings today. It's a far
cry from what it was during Dhanteras last year," said executive
Sanjay Kumar at Chawla Jewellers in New Delhi. Saleswomen in
bright traditional sarees sat idle.
Outside the shop, a big banner trumpets a 1,000 rupee ($16)
discount on gold market prices and a discount of up to 50
percent on diamond jewellery.
"People are suffering from cost inflation, they don't have
liquid cash. We expect sales of about 25,000 rupees today, about
half of what we made last Dhanteras," said TM Bhandari, selling
jewellery at Mohan Silver Shoppe in New Delhi.
Last year over this festival period around 60 to 70 tonnes
of gold was sold, roughly the amount imported in an average
month, according to Bachhraj Bamalwa, a director at the All
India Gems and Jewellery Trade Federation.
This year, supplies in the domestic market have virtually
dried up because of restrictions on gold imports imposed by the
government to reduce the trade deficit and support the currency.
Import duty on the precious metal is at a record high of 10
Gold is selling for around 30,700 rupees per 10 grams,
about $120-130 an ounce over London prices. That's encouraging
some recycling, which helps supplies, but buyers that can wait
are simply deferring their purchases.
SEARCHING FOR SALES
Given high inflation and low real interest rates, many
Indians see gold as an investment. If demand is being displaced
anywhere this year, it is to silver and diamonds, which hold
their value in the same way.
Imports of silver - which costs just 500 rupees per 10 grams
- are likely to hit a record this year after reaching 4,073
tonnes from January to August, more than double the 1,921 tonnes
in the whole of 2012.
Jewellers are pulling out all the stops to boost sales at
this festival time and television channels are awash with
One slot from jeweller Tanishq has taken Twitter by storm,
breaking new ground by starring a woman embarking on a second
marriage, an event that doesn't normally attract as much glitz
as first weddings in deeply conservative India.
Gitanjali Gems, one of the largest branded
jewellery retailers in the world, is pushing sales by cutting
prices of diamond jewellery to as low as 4,900 rupees.
Along with many other chains, it is also competing for
business by offering vacations, handbags and other prizes to
customers who buy gold.
"Diamond jewellery sales may grow by 10-15 percent," said
Chairman Mehul Choksi.
But without gold, this year's festival season just won't be
the same for housewife Sadhna Goel.
"I bought just two silver coins worth 565 rupee each," said
Goel, shopping in Karol Bagh, New Delhi's gold hub.
"We used to buy gold coins or gold rings but this is the
first time in many years that we have been forced to stick to
buying silver, steel utensils and such."
($1 = 61.4550 Indian rupees)
(Additional reporting by Aradhana Aravindan and Nandita Bose in
Mumbai; Writing by Jo Winterbottom; Editing by Alan Raybould)