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The hike in import duty on gold jewellery from 10 per cent to 15 per cent by the Centre, ostensibly to aid the domestic jewellery industry, is unlikely to have much of an impact.
“It is not going to help the gold jewellery industry at all, though the Government thinks it is doing a favour to us,” says B. Girijaran, President of the All-Kerala Gold and Silver Merchants Association.
The reasoning of Girirajan, who is a partner of the family-run Bhima Jewellers, is based on two factors.
“First, imported jewellery is a niche market and is bought by a small group of high-end consumer,” he said. For such clients, the increase in the import duty from 10 per cent to 15 per cent wouldn’t matter.
“They will continue to buy imported jewellery, no matter how much the duty is,” he said.
“They are not going to shift their preferences to Indian jewellery.”
Secondly, Girirajan said, even if there is going to be an increase in demand for the domestic jewellery following a hike in the duty of imported jewellery, the industry is facing a heavy shortage of raw material – gold – because of the stiff restrictions imposed by the government on the import of gold coins and bars.
“The industry is in a deep crisis because of the scarcity of gold,” he said.
“Then how are we going to benefit?”
However, V.N.M. Ravi, a council member of the Gem and Jewellery Federation, feels that jewellery import will fall because of the duty hike. He said that Indians imported jewellery mainly from Italy and Turkey.
Italian and Turkish ornaments are of high fashion and high value and these are mainly bought from Singapore and Dubai.
Thailand is also a source of import.
M.P. Ahmed, General Secretary of the Kerala Jewellery Federation, said that the duty hike would only add to smuggling of gold into India.
Meanwhile, Kerala jewellers, who supply a substantial quantity of ornaments to the domestic market, are worried that the demand would be slack in the upcoming Diwali season.
Sale at most jewelleries during the Onam season was lower than anticipated.
Diwali is one of the high seasons for jewellery purchase across the country and the jewellers are worried that the Onam experience could repeat on a national scale.
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