Traders have sought relief from the central government. Recently, representatives of the All India Bullion and Jewellers Association (AIBJA) met the director general of foreign trade and senior government officials, including the revenue secretary and the economic affairs secretary, to air their grievances.
“We have given some suggestions to the government with regard to the gold import policy. Only a positive outcome can save this industry from a crisis. The current policy makes smuggling attractive and it has also created a monopoly of a few agencies designated for gold imports. This is against fair market practices. Also, a large number of jewellers and goldsmiths are on the verge of closure due to non-availability of gold,” said M C Jain, president, AIBJA.
Goldsmiths and artisans are also a worried lot, as there is negligible business even in the peak festive season. It is feared that the sector might witness widespread unemployment as over two million people, mainly in Gujarat, Kolkata and Coimbatore, are engaged in bullion and related businesses.
The official gold import numbers show a sharp decline since July. The imports have been minimal, in the range of 5-12 tonnes during recent months against 161 tonnes reported in May this year.
The premium on gold for physical delivery has increased from $30 an ounce (an ounce = 31.1g) to $80-100 an ounce in a month’s time. “I have never seen such a high premium. A few years back, the maximum premium paid was up to $45 an ounce,” said a bullion trader from Ahmedabad.
“Only a few importing agencies are given licences to import gold under the Reserve Bank of India (RBI)’s norms. Jewellery making is a small industry in India but it employs a huge workforce. Non-availability of gold has resulted in a jobless workforce. Even at the time of Diwali, workers are sitting idle,” said Jagdish Acharya, a bullion trader.
“The customs duty has increased by 30 times since 2000, when it was just Rs 100 for 10g. Now, it has been increased to Rs 3,000 for every 10g. Notably, during the same period, gold prices have increased by merely five-six times,” Jain stated.
According to AIBJA, the increase in customs duty has made gold costlier by Rs 3 lakh a kg. “This has given rise to gold smuggling in India from neighbouring countries like Bangladesh, Nepal and Pakistan,” said a member of AIBJA. The association noted that nominated agencies for gold imports were charging unreasonably high commissions of up to $100 per ounce or Rs 2 lakh a kg.