Jewellery makers see fall in supply of gold

Fall in gold supply was accentuated by the fact that nominated agencies didn't release the commodity, as they were expecting rationalisation in import duty

Through three weeks, jewellery exporters have seen a fall in the supply of gold and this has hit the fabrication segment. The fall resulted from delay by the Directorate General of Foreign Trade in clearing gold procurement requests by manufacturers. Also, nominated agencies have deferred supply to bulk consumers amid expectations of rationalisation in import duty.

According to Reserve Bank of India (RBI) guidelines, nominated agencies should make 20 per cent of the imported gold available to jewellery exporters. On producing proof of exports (20 per cent of the imported quantity), they are allowed another lot of imports. This norm, implemented in August last year, was aimed at curbing gold imports into India and cut the country’s burgeoning current account deficit(CAD).

“Despite showing proof of jewellery exports, authorities have been holding on to the requests of jewellery manufacturers for several weeks. For the last three weeks, there was virtually no supply of gold to jewellery exporters, a dry spell for them,” said Pankaj Parekh, vice-chairman, Gems & Jewellery Export Promotion Council (GJEPC).

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Gold import curbs: 15 million jewellery makers may lose job

Squeezed by government rules meant to curb a surge in gold imports, India’s bullion industry is shrinking, with banks and others opting to redeploy personnel for now but possibly facing big job cuts in coming months.

Refiners, jewellery manufacturers and retailers say they could start cutting jobs after Diwali, one of India’s biggest festivals, in the first week of November as festive demand will have sucked supply dry. Some have already begun to do so.

Gold on the local market is now fetching a record premium of $130 an ounce to the global bullion price and that is expected to climb even higher because of coming festivals.

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