The rise in inflow of gold jewellery through non-resident Indians (NRIs) has provided relief from high prices, with the marriage-season demand coming up. The inflows are helping correct the physical delivery premiums. These have come down from $210 an ounce in early December to $120. These are still high because official imports have remained very low, while unofficial ones are rising fast. The reason is the duty of 10 per cent and stringent rules. This has hurt the demand for jewellery 30 per cent; investment demand has seen a big fall.
NRIs are allowed to bring a kg of gold by paying 10.3 per cent duty on it. In many cases, such imports are planned in advance for selling in the domestic market. The benefit to the importer is he saves the 10 per cent of physical market premium. Jewellery import through official channels has started rising but this attracts 15.5 per cent duty; with other taxes, it costs 17.5 per cent more.
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Rajiv Popley, director, Popley Group, with offices in Dubai and in India, said: “In the past few months, we have seen huge demand from Indian jewellers, buying for sale in India.” They import jewellery from Dubal to sell in the Indian market, he said.
Unofficial import remains unabated. This is for those willing to take a risk or under compulsion to run their units. Many jewellers are crying foul on the severe controls on imports. Veterans said the recent months had seen more control than the past two decades. Availability in the market is estimated at 300 tons. Imports through official channels have been 150 tons; 80-90 tons have come from existing customers who have sold old jewellery or converted these into new ornaments. The rest is estimated to have come by unofficial channels.
Unofficial imports attract a 3.5 per cent ‘hawala’ premium and other costs. Sudheesh Nambiath, India analyst, Thomson Reuters GFMS, said, “If imports in the form of jewellery and through NRI remain as it is, it would reduce the hawala premiums to a great extent. It is, though, a cumbersome process compared to the pre-August days. Still, one would prefer taking an official route wherever possible, at least for those in the organised trade.”
Source: Business-Standard
Source:Bullion Bulletin