Bank rider on gold hits jewellers

Gold is not glittering for thousands of jewellers across Karnataka who are facing shortage of the precious metal to make jewellery because of restrictions imposed on import by banks.

The restrictions imposed by the Union government to reduce import of gold and arrest the current account deficit have particularly affected the small and medium jewellers.

Badly hit

Seeking a review, members of the All India Gems and Jewellery Trade Federation said here Friday thousands of jewellers and goldsmiths have been severely affected and workflow has become erratic. “There is now a huge gap in demand and supply, which could result in an increase in smuggling,” Bangalore Jewellers Association secretary D.V. Ramesh told presspersons here.

While the demand for gold in the industry across Karnataka is around 2,000 kg a day, the supply is only 500 kg. Bangalore alone requires about 500 to 800 kg a day, he said, adding that the restriction has hit about 25,000 jewellers across the State, some 6,000 of whom are in the city.

Extended wait

Explaining the restriction, he said: “Earlier, we could purchase gold from banks immediately. However, jewellers now have to wait for a week or 10 days after full payment for the consignment. This is because Indian banks, which earlier received gold from the international market without making immediate payments, have now been directed to pay and get the gold. Since banks are not willing to invest, we are forced to pay and wait for the consignment.”

The jewellery industry alone was not responsible for the current account deficit, Mr. Ramesh said and suggested that instead of restricting the banks, the government can launch a gold bond scheme that can attract huge quantities of gold. It can then sell it to jewellers to cut imports. He estimated that Indians have 30,000 to 40,000 tonnes of gold.