‘Involve jewelers in gold schemes to realise maximum benefit, curb import’

Deepak Kumar | The Dollar Business

As the government prepares to launch Sovereign Gold Scheme and Gold Monetisation Scheme in November, industry experts have asked for the involvement of jewellers to make the two schemes successful and check imports.  “If implemented properly by including jewellers, the scheme can reduce India’s import burden by 20% per year which is equivalent to $5 billion,” Bachhraj Bamalwa, director & ex-chairman at the All India Gems and Jewellery Trade Federation (GJF), told The Dollar Business. Bamalwa said the industry has sent a detailed representation to the government requesting jewellers’ participation in the government-bank collaboration. “Part of gold will be used to make coins and sold to consumers. Gold will come from one consumer to another. Jewellers should be part of the scheme and should be offered 0.25%-0.5% interest per annum. The government should implement these measures which will also protect the interest of the jewellers,” Bamalwa said.  Analysts believe that consumers have a direct trading relationship with jewellers, and there is a trust factor between them since generations. Consumers are more comfortable in trading with jewellers than the government.  Bamalwa also recommended 3-4% interest rate on gold deposits in order to make the schemes attractive for consumers.   With the implementation of these two schemes, the government aims to raise Rs.15,000 crore through gold bonds in the current fiscal. It also aims to reduce the country’s dependency on gold imports which amounts to nearly 800-900 tonnes each year. Behind China, India is the world’s second largest consumer of the yellow metal. The two Asian giants account for nearly 40-45% of the global gold demand. Together India and China are expected to consume 2,700 tonnes of gold in 2015-16, while the global mined production is projected to be around 3,150 tonnes. In the previous financial year, India imported about 900 tonnes of gold, up 36% from 665 tonnes in 2013-14. However, gold imports in September fell by 52% to 67 tonnes from 141 tonnes in August. Despite a huge decline in its imports last month, the industry is confident that India’s gold imports will touch about 900-1000 tonnes this fiscal, mainly owing to the upcoming festive and wedding seasons.  

October 10, 2015 | 2:57pm IST.