Experts in the UAE are predicting an uptick in sales after the Indian government raised import duties on gold and other precious metals to 12.5 percent.
While fears are the increase from 10 percent to 12.5 percent could dampen retail demand and boost smuggling in the world’s second-biggest bullion consumer, operators in the UAE are rubbing their hands at the potential influx in Indian business.
Karim Merchant, group CEO and MD, Pure Gold Jewellers, told Arabian Business: “India raising its import duty on gold to 12.5 percent is good news for the UAE jewellery industry. Indians living here and Indian tourists are one of the largest customer base for the jewellery industry in the UAE. With the import duty in India going up, pricing in the UAE market becomes more attractive to Indian buyers.” The current price per gram of 22k gold in the UAE is AED159 ($43), this compares to INR3,350 ($48) per gram of 22k gold in Delhi.
Abdul Salam KP, Group Executive Director, Malabar Group, said: “With the revised duty structure, customers will benefit more than Rs400 per gram on gold purchases from GCC countries.
“This will definitely encourage bulk buyers, especially on wedding-related purchases, to visit the UAE, other GCC states, Singapore and Malaysia. “If a family of four visit and bring back ornaments on a reasonable allowed quantity, they can cover their trip cost easy. They also have the additional benefit of much wider choice from international designs of jewellery.”
Jewellery trade associations had asked India’s government to reduce gold import duties. But Finance Minister Nirmala Sitharaman ignored their calls and raised the import duties.
The move is aimed at bringing down the fiscal deficit.
But Salam feared this will have a negative effect on the country’s economy. He said: “The additional import duty for gold will hurt the domestic gold and jewellery market and promote illegal gold businesses, which is detrimental to the economy.”
Historically, jewellery sales account for 75 percent of the total gold demand and sales and bullion sales accounting for the remaining 25 percent sales in the Indian market.