Duty Reduction Fuels Jewellery Sales Surge

Ahmedabad: A recent cut in customs duties, alongside a drop in gold prices, has ignited a notable surge in gold sales in Ahmedabad. Over the last 10 days, jewellers have reported a significant increase in consumer demand. Currently, gold is priced at Rs 73,000 per 10g in the retail market, while the wholesale price is Rs 45 per kg, attracting buyers eager to invest in the precious metal.

One of the more striking changes in purchasing patterns is that for the first time, gold bought without a bill has become more expensive than billed gold. Sources indicate that unbilled gold now costs at least Rs 400 more per 10g compared to legally billed purchases. This shift has encouraged buyers to opt for formal, transparent transactions. As a result, demand for gold has nearly doubled, with many opting for legally compliant purchases.

Typically, around 100kg of gold is sold in Ahmedabad over a 10-day period during this time of year. However, this year sales have skyrocketed, reaching approximately 200kg. Much of this demand is focused on gold coins and bars, which consumers plan to later convert into jewellery for events like weddings. Rohit Choksi, former president of the Jewellers’ Association Ahmedabad, commented, “The demand has almost doubled following the recent duty reduction. A large portion of these purchases is in gold coins and bars, which will later be converted into jewellery for weddings and other significant occasions.”

Another driving force behind the increase in demand is the rising hawala market rates. Hawala, an informal system for transferring money, often facilitates cash transactions for gold purchases. However, hawala rates have now risen to 8%, surpassing the 6% duty on gold. This has made informal transactions less appealing to consumers, who are now choosing official, billed purchases to save costs.

Haresh Acharya, a representative of the India Bullion and Jewellers’ Association (IBJA), applauded the duty cut as a step toward reducing smuggling and promoting transparency in gold transactions. He noted that the upcoming festive and wedding seasons are expected to keep demand strong. “The duty cut has significantly boosted demand, and with the hawala market becoming less attractive, more people are turning to formal channels for their purchases,” Acharya explained.

Gold imports also reflect this heightened demand. In July alone, Gujarat imported 10.5 metric tonnes of gold, with much of this supply hitting the market toward the end of the month. In response to the surge in demand, many jewellery showrooms in Ahmedabad have extended their operating hours and remain open on Sundays to cater to the influx of customers.

As the festive season approaches, jewellers are optimistic that the trend will continue, driven by both the recent price drop and the convenience of purchasing through legal channels. With more consumers choosing transparent transactions and the wedding season on the horizon, demand is expected to remain strong in the coming months. Other country’s such as Australia have also seen an increase in Indian gold Jewellery demand. Recent trends show that businesses such as Cash for Old Gold have purchased significantly more Indian Jewellery in the last few months compared to the start of the year. This is mostly due to Indian Migration and high gold prices.