For shagun not investment: Jewellers lift self-imposed ban on gold coins

Jewellers have temporarily lifted their self-imposed ban on sale of gold coins this Diwali due to the custom of buying as well as gifting precious metal and jewellery during the festive season.

“Gold coins are not bought for investment but are rather seen as shagun and given as gifts. So we have decided to temporarily lift the ban on sale of gold coins for Dhanteras and Diwali,” Ashok Minawala, board member at the All-India Gems and Jewellery Trade Federation, was quoted as saying by Financial Express_._

Earlier this year, the jewellers had decided not to sell coins, and instead divert them to jewellery-making to meet the shortage arising from the government’s curbs on imports of the yellow metal.

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Thee All India Gems and Jewellery Trade Federation asked members to stop selling gold bars and coins to both corporate and retail customers in June.

The trade of gold coins and bars constitutes around 35 percent of their business, but retail outlets are unlikely to be hit much as coins and bars are only in demand for special occasions or for investment purposes.

“The jewellery community is one in supporting the country in times of crisis. We are happy to help with this voluntary action. This is likely to continue for six months or till the CAD crisis is reduced. However, the government must make fundamental changes to increase manufacturing and that will lead to value added exports,” federation’s Chairman Haresh Soni had said in a media release.

This self-imposed ban camedirectly after an appeal by Finance Minister P Chidambaram to Indians to stop buying gold.

On 13 August, the government raised the tax on gold imports from 8% to 10%, to curtail gold demand and tackle the record current account deficit that also weakened the rupee.

Gold consumption in India, which imports almost all the bullion it uses, accounted for 20% of global demand in 2012, according to data from the World Gold Council.

Indians imported 950 tonnes of gold in fiscal year 2013. However,since then,curbs on the metal have brought down gold imports to a mere 7.24 tonne in September from a record 162 tonne in May this year.

However, the curbs are unlikely to have a long-term impact as according to the World Gold Council, India’s demand for gold is expected to surge this quarter to reach up to 300 tonnes, boosted by the festive and wedding season.

Demand for the precious metal in India is set to increase by about 15 percent from this month to December compared with the same period last year, the organisation forecast.

The increase in demand would be driven by “20 per cent more auspicious days” compared with the same time last year, during which Indians would buy gold, as well as “pent-up demand”, Somasundaram PR, the WGC’s managing director for India, had said in a statement.