The gems and jewellery industry in the country is expecting gold prices to be volatile during 2020, as the hostility between the US and Iran may continue this year.
Notwithstanding the price volatility, the industry hopes that various forms of government support may help it grow 10 per cent in terms of volume during the year as compared to a 10-15 per cent decline in 2019.
When missiles were fired by Iran, gold prices touched $1610 and in the Indian market crossed Rs 42,000. But luckily, the same night, US President Donald Trump said the country embraced peace. Immediately, the price fell by $50. The gold and jewellery industry feels such fluctuation will be going on throughout 2020.
The price volatility has gone up around 5-10 per cent owing to the US-Iran tension. This may impact ability of the jeweller to purchase inventory. The impact is more considering that customs duty of 12.5 per cent imposed by the government in mid 2019, which along with goods and services tax (GST), is around 15.5 per cent against the earlier three per cent.
“GJC has approached the Centre, requesting it to withdraw the duty in the upcoming Budget. If this happens, it may help the industry to manage the volatility better,” said N Anantha Padmanaban, chairman of the All India Gem and Jewellery Domestic Council (GJC) to Business Strandard.
In 2018, India imported 766 tonnes of gold, which came down to 710 tonnes in 2019. Around 10 per cent of this may go for investment, while the jewellers get the rest, along with the old gold for recycling during the year.
With Tamil festival Pongal falling next week, and then weddings starting to take place, the industry is expecting the demand, which was down by 25-30 per cent in the recent past due to the economic slowdown, to pick up.
Apart from the demand to reduce customs duty, the industry has also asked the government to raise PAN card limit for gold purchases from Rs 200,000 to Rs 500,000.
It also asked the government to allow jewellers to be agents for hallmarking and expand the range from 14,18 and 22 karats to 20, 23 and 24 karats, which are prevalent in certain states. The industry’s demand to form a steering committee led by government officials and representation from the industry to discuss the issues has not been considered by the government in the last six months.