‘Govt must consider increasing jewellery exports than hiking gold import duty’

The appetite for gold ornaments will remain undiminished in India despite hike in import duty on the yellow metal. This is since there is no comparable investment that offers social security as the precious metal does, according to K. Srinivasan, Managing Director, Jewel One, a jewellery retailer.

The company, which opened its third retail outlet at Karur recently, will open the fourth showroom in Coimbatore on January 23 and is on course to have 10-12 showrooms at the end of the current fiscal, he said.

Speaking to

Business Line from Karur, he said that the argument of the Government that gold imports were impacting the balance of payment position might sound valid. But instead of targeting gold imports, the Government should look at other opportunities for revenue generation like increasing exports. He felt that hiking the duty on gold imports might not have the expected impact of curtailing demand since gold is perceived to be a haven. He said that gold offered great liquidity and was a hedge against inflation and felt that the business would go on as usual for the industry.

Srinivasan, who is also the Managing Director of Emerald Jewel Industry India Ltd, which is into manufacturing and export of gold ornaments, wondered how the appetite for gold could be curtailed in the absence of any other comparable investment tools. Referring to the the Government move hiking the import duty on gold to 6 per cent (from 4 per cent), he said the gold prices witnessed daily fluctuation of 5-10 per cent which did not deter people from purchasing gold ornaments. Any marginal increase in duty rate would not have any impact on purchase decisions of people. But he urged the Government not to push gold price beyond the reach of the people because of their reliance on gold for social security.

Asked whether the rising price of gold was having any impact on the retail roll out plans of Jewel One, Srinivasan said his retail stores, based on profit-sharing model, were not large format stores. He said his expectations were small and pricing was immaterial to the patrons who supported the format since quality and design were the focus areas for Jewel One.