All India Gems and Jewellery Trade Federation gives a call to its over 6 lakh members to stop bullion sale for the next six months to complement the government’s efforts to bring down current account deficit
The sale of gold coins and bars is likely to take a major hit in the coming days in the State.
The All India Gems and Jewellery Trade Federation has given a call to its over 6 lakh members, including over 20,000 in the State, to stop bullion sale for the next six months. The federation has taken the decision to halt the sale of coins and bars to contribute its mite to the government’s efforts to bring down current account deficit, a primary reason behind the steep fall in the rupee value.
Gold coins and bars account for up to 20 per cent of all gold sales in the country by jewellers. The federation is hoping that jewellers will follow the direction even during festivals. The stoppage of sale was only a temporary measure and if it was not followed, there could be a situation when jewellers would not have any gold to sell. The fear of those engaged in the trade stems from the fact that the government and the Reserve Bank of India have already imposed severe restrictions on gold imports.
The government had enhanced duty on gold imports from six per cent to eight per cent resulting in a steep decline in imports. Imports, according to GJF, were 117 tonne in April after prices plunged to a two-year low. The State, according to GJF former chairman Vinod Hayagriv, contributes around Rs. 2,000 crore in the form of gold coin sale alone. Coupled with the bullion sale, the value is expected to be close to Rs. 4,000 crore.
The restriction in the sale of bullion is likely to severely affect the Value Added Tax collection which is expected to come down on account of decline in the value and volume of bullion sale.
“These restrictions will not help either the State or the Central government. The government should continue the old policy of gold imports instead of imposing restrictions,” Mr. Hayagriv said.
Though the GJF has called for stoppage of sale of coins and bars, business seemed as usual in the jewellery stores across the State raising doubts on whether the traders were adhering to the request of the federation. “We cannot stop the sale overnight. The traders will have invested heavily into manufacturing of coins, the product that comes out in a faster mode,” Mr. Hayagriv said.
Coupled with this will be the pending orders from customers which traders need to complete before the gold coins and bars are emptied. “It will take at least three weeks for the inventory to get exhausted. Customers will start feeling the impact towards the month-end,” he said.
GJF director Mohanlal Jain said the sale of bars and coins to unregistered traders had already been put on hold as the import quantum had come down drastically over the past couple of months.