Along the narrow streets of the historic Gems Zaveri Bazaar in Mumbai, many stores display signs saying “we buy old gold jewelry”, enticing buyers face a $ 125 premium ounce in London prices GOVERNMENT CRACKS DOWN as rising imports.
“My brother is getting married next month, requiring jewelry for the bride,” said the 35-year-old Shazia Iqbal Ahmed, who brought in bulky bracelets and a necklace for recycling.
“The family thought it better to use our old sets of chain jewelry for the new bride.We’ll End up saving Rs 50,000 in just the premium. It is profitable for us at the end.”
It is expected that about 1 million couples married in the current wedding season, which is 71 wedding days of good omen and will last until May. About 33,000 weddings took place on November 19 alone, more than anyone else day this year.
Gold is always in demand, in a typical gift of a pendant, earrings or ring, weighing 5 to 10 grams, depending upon the financial circumstances. Parents of the bride usually give the heaviest items as a necklace or bangles that weighs 50 grams or more.
But a government crackdown on gold imports that fueled runaway hit output in the current account deficit has led to new rules that impose higher duties, limiting imports and make it difficult for jewelers to home supplies.
Jewelers say the move could help mobilize more than an estimated 20 thousand tons of gold stored in Indian households, about 35 times the Reserve Bank of India’s official reserves.
“In this season of weddings, as there is no available gold in the marketplace, people have begun dating recycled gold. They has started to exchange the golden age again and pay for the costs of labor,” said Kumar Jain, who owns a gold shop retail Zaveri Bazaar.
Jain expected that about 400 tonnes of recycled gold to enter the market this fiscal year to March 2014, compared to standard rates of about 130 tonnes, according to Thomson Reuters GFMS.
“The general sentiment is weak, the import policy is not conducive, which resulted in high premiums. Most consumers are seeking to exchange old for new,” said Haresh Soni, chairman of All India Gems and Jewellery Federation, which represents more than 300,000 jewelers.
Government will be greeted by increased levels of recycling of gold, as it tries to curb the current account deficit to an acceptable range of 3.6% to 3.8% of GDP, from 4.9% in June quarter and is unlikely to reverse its recent steps in the near future.
“I think (gold) strictures will be there during at least the next six to twelve months,” said Naina Lal Kidwai, chairman of the Federation of Indian Chambers of Commerce and Industry.
Reported: Business Standard