* India gold jewellery imports jump to 4-5 T in Jan vs 1-1.5
T in Nov
* Imported prices cheaper even with 15 pct duty, says
* Gold clampdown may force jewellers to shift manufacturing
By Siddesh Mayenkar
MUMBAI, Feb 5 Indian jewellers are stepping up
imports of finished gold jewellery from Dubai and Singapore, as
a record high import tax on the metal and rising premiums
demanded by sellers are choking bullion supplies in the world's
India has put in place measures to dissuade gold buying to
tackle a widening trade deficit, including a 10 percent import
tax and a requirement that a fifth of all imports of the metal
be shipped out. As a result, domestic sellers are asking for up
to 10 percent more than quoted gold prices for deliveries.
The measures are making finished jewellery imports a viable
option and could even reshape the domestic jewellery industry by
luring their manufacturing overseas.
Gold jewellery imports have surged nearly four times to 4-5
tonnes in January from 1.0-1.5 tonnes two months prior to that,
according to the All India Gems and Jewellery Trade Federation,
which represents more than 300,000 jewellers.
A 10-gram gold chain from Dubai costs 27,000 rupees ($430),
about 10 percent lower than the cost in India, said Raman
Solanki, owner of Mumbai-based Sangam Jewels and Gold, who now
regularly imports from Dubai. The cheaper price is even after
adding a 15 percent duty that finished jewellery imports
Indian jewellers import finished jewellery either to sell
directly or to melt to make customised designs.
"Since there is no gold available, we import jewellery as it
fits well with our costing. We imported about 700-800 kg of
jewellery from Dubai last month," said Prithviraj Kothari,
managing director of Mumbai-based Riddhisiddhi Bullions Ltd.
Dubai-based wholesaler Siroya Jewellers, which exports to
India, has also seen a spurt in jewellery sales to India.
"There is demand for jewellery from India due to a shortage
of gold there," said Rajesh Jain, a partner at Siroya Jewellers.
MANUFACTURING MOVING OVERSEAS?
Cheaper imports of finished jewellery now pose a threat to
local jewellery manufacturing units that employ more than 10
million workers, excluding retail store employees.
Hit by lower availability of gold, a few Indian jewellery
makers such as Gitanjali Exports are also thinking of raising
capacities at their overseas manufacturing units.
"Some jewellery exporters are definitely contemplating
shifting part of their production to other locations like
Thailand, Malaysia and China," said Sanjeev Agarwal, chief
executive of Gitanjali Exports, a unit of Gitanjali Gems
Gitanjali Exports is planning to increase capacities at its
units in China and Thailand, said Agarwal.
To make gold readily available for jewellers, the government
should remove the condition that forces importers to export 20
percent of their overseas purchases, said Bachharaj Bamalwa,
director of the All India Gems and Jewellery Trade Federation.
There are indications that India may give in to the demand,
but only after March when the government would get to know about
the exact extent of the trade deficit.
Gold imports fell to just 21 tonnes in November against a
record 162 tonnes in May last year, pushing up premiums to a
record $160 an ounce on London prices. It has also triggered a
huge rise in smuggling and recycling.
In its efforts to curb illegal imports, New Delhi focuses
more on big buyers, with jewellers now required to give details
of any purchase of gold bars or jewellery worth more than
500,000 rupees as at the end of January.
($1 = 62.61 rupees)
(Editing by Mayank Bhardwaj and Muralikumar Anantharaman)