All India Gems and Jewellery Trade Federation opposes government’s move to curb gold imports

LUCKNOW: All India Gems and Jewellery Federation (GJF), the national nodal and the largest single trade body in India for the promotion and growth of trade in gems and jewellery across India, has urged the Union Finance Minister Arun Jaitley, the Finance Ministry and the Reserve Bank of India to avoid imposing curbs on gold imports as it could spell doom for the gems and jewellery sector.
Considering that the gems and jewellery sector has been going through tough times, GJF also sought the formation of a nodal Ministry to represent its sad plight and sorry state. GJF has proposed a national debate on this matter because gold is part and parcel of the common man’s life since thousands of years.
Disputing some of the data of gold imports released in September-October 2014, GJF claims that the increase in gold imports in September- October 2014 was a normal trend. This increase was stimulated by advance buying prior to festival time and anticipation of additional curbs on gold imports as indicated by the government.
GJF also pointed out that the comparisons on a year-on-year (y-o-y) basis with September-October 2013 were meaningless as there were hardly any gold imports in September-October 2013 due to uncertainty following the imposition of the 80:20 Rule. Rather than relying on two months of data, GJF urged the Government to wait for two more quarters of data rather than deciding to impose curbs on a 2,000-year old sector.
GJF has also alleged that importers have not yet distributed gold imported in September-October 2014 to the jewelers as the gold hoarders were holding on to their stock in anticipation of higher profits resulting from further curbs and restrictions to be announced by the Government. GJF has alleged that the uncertainty created by the Government is responsible for higher imports.
As part of its self-regulation initiative, GJF has proposed to curb sales of gold coins and bars immediately by its members to restrict demand – gold coins and bars account for approximately around 300 tonnes (as per FICCI-AT Kearney report 2013). GJF has proposed unlocking of idle gold in the country to the tune of 1,000-1,500 tonnes within 3 years through Rashtriya Swarn Nivesh to take care of CAD.
Haresh Soni, Chairman, GJF, said, “Since the base of gold imports in September-October 2013 was low, the increase in September-October 2014 may seem very high but this comparison cannot be used to impose further restrictions. Gold prices have fallen and investment demand in gold has reduced drastically due to negative returns. Therefore, the gold, which is being imported, is purely used for manufacturing jewellery and not for investment purposes.”
He added that it is unfair that the Government restricts the basic raw material for the gems and jewellery sector as this will result in loss of jobs to lakhs of jewellers. “After all, the gems and jewellery sector is the second largest employer of people after the software industry and the Government should stimulate a comprehensive gold policy framework to curb smuggling and dispel internal volatility and uncertainty of supply-demand”, he said.