India's gold loving public may not be able to buy gold coins and bars this Dhanteras and Diwali.
A number of India's top jewellery and bullion traders have voluntarily decided not to sell gold coins or bars for six months, in an effort to help the government keep the current account deficit under check.
The move was made after the 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.
Joining the ban are major retailers such as Tanishq jewellers, TBZ, Gitanjali and Reliance jewellers.
"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 said in a release to the media.
The federation has conducted over one dozen meetings across the country with all the local jewellers associations and members in the last one week to explain the precarious CAD situation, he said. "We have requested entire trade across the country to stop selling and taking orders for gold bullion and coins," he added. Small and large jewellers, manufacturers, major jewellery retail chains have committed to the GJF that they will stop sales and stop taking orders of coins and bullion gold bars to consumers and corporates.
India is the world's biggest gold buyer, and soaring imports have sent its current account to a record deficit. New Delhi has raised the import duty on gold twice since January 1, doubling it to 8 percent, and the central bank has imposed measures forcing customers to pay up front for gold.
However according to the Times of India, market estimates suggest that the demand for coin and bars has surged 150 percent over the last four years, after households shunned financial investments in favour of gold.
The union move was made directly after an appeal by Finance Minister P Chidambaram to Indians to stop buying gold. "India does not produce an ounce of gold. You pay in rupee, but the government has to spend dollars to buy gold," he said.
"I do not buy gold. To think that gold is the safest investment is wrong, " the finance minister added.
With inputs from Agencies
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Updated Date: Dec 20, 2014 20:40:18 IST