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Duty cut boosts gold jewelers' sales by approx. 35-40 per cent


The duty cut on gold imports—from 15 to 6 per cent in the latest Budget—has not only delighted customers but also brought significant relief to gold retailers. However, since the duty reduction, showrooms are witnessing a massive influx of customers, with sales already soaring by 35-40 per cent nationwide.


On the MCX (Multi Commodity Exchange), this price drop caused a notional loss of Rs 10.7 trillion in investor wealth on budget day, as gold prices plummeted by a drastic Rs 4,000/g in a knee-jerk reaction.


According to the World Gold Council, Indian households collectively owned 25,000 tonnes of gold in 2023, equivalent to 40 per cent of the national GDP. A report from the Oxford Gold Group earlier this year claimed that India holds 11 per cent of the world's gold, surpassing the reserves of the US (8,133.5 tonnes), Germany (3,359 tonnes), Italy (2,451.8 tonnes), and the IMF combined.


MP Ahammed, chairman of Malabar Gold & Diamonds, the largest jewelry retail chain in terms of revenue, reported a nearly 60 per cent increase in sales across their showrooms since the budget announcement.


Srikumar Krishnamurthy, senior vice-president & co-group head of corporate ratings at Icra Ratings, expressed optimism about the positive impact of the duty cut on gold retailers' volumes for the current fiscal year. He initially forecasted a single-digit decline but now anticipates a high single-digit volume growth.


Krishnamurthy noted that increased gold imports following the duty cut are unlikely to spike the current account deficit, stressing that the move would effectively combat smuggling, which currently accounts for 15 per cent of gold demand and affects 65 per cent of the retail industry, dominated by unorganized players.



source: News Indian Express



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