Hit by the spate of restrictive policy measures, the All India Gem and Jewellery Trade Federation (GJF) has urged the Government to come out with an attractive deposit scheme to bring out 25,000 tonne of gold valued at $1.25 trillion held by consumers.
The Reserve Bank of India has instructed banks to collect the entire money before importing gold for its customers. Besides, import duty was recently increased by two per cent to eight per cent.
These measures have tightened the supply of gold for jewellers, even as the industry is bracing for festive demand that starts in August.
Nitin Kadam, Director, GJF said the industry is facing a huge shortage of gold and has to pay a premium of Rs 150 to Rs 250 for 10 gram. Ultimately, customers have to bear this cost for no fault of theirs, he said.
“We will have a joint meeting next Thursday with top officials of Finance Ministry, Commerce Ministry and RBI to highlight the miseries of the industry. While we support all Government measures to contain the Current Account Deficit, we do not want them to kill this industry,” he said.
Of the 25,000 tonne of gold held by Indians, around 40 per cent are in gold bars and coins. Even if the Government deposit scheme manages to bring out five per cent of these bars and coins, it would meet the industry’s need for two years, said Kadam.
GJF has urged the Government to ban gold imports by high net-worth investors and institutions. As per GJF estimates, this move alone will reduce imports by 75 to 150 tonnes per annum. “If corrective measures are not taken, this Rs 275,000-crore industry would be brought to its knees. It will be pushed back to early 90s when much of the gold need was met through unofficial channels including smuggling,” he said.