 "Photo: Reuters")
Demonetisation's impact has travelled all the way to Dubai as Indian tourists are avoiding foreign tours since November. Among popular destinations, Dubai has been one of the easiest, nearest and cheapest. The immediate casualty has been gold demand in Dubai by Indian tourists.
Dubai’s famous Gold Souq, a prime market for the yellow metal and similar to India's Zaveri Bazar in Mumbai or Manek Chok in Ahmedabad, which houses many prominent wholesale and retail jewellers, has seen a plunge in gold jewellery demand from Indian tourists.
Buying jewellery from Dubai was lucrative for Indian tourists due to the trustworthy purity of gold and ease of using unaccounted money by buying Dubai's currency, the Dirham, with some premium in the hawala market. Further, Customs duty of 10 per cent can be avoided when reasonable jewellery is worn by tourists.
A Dubai-based jeweller, who runs a chain of jewellery shop including a show room in Dubai's gold souq, said on the condition of anonymity that "Indian tourists' share in Dubai gold demand is around 15-20 per cent and that has been affected." He said that the overall flow of Indian tourists has come down in Dubai. Other than jewellery, electronic gadgets like costly cell phones, laptops and DSLR cameras etc are the other items on an Indian tourist's shopping list in Dubai.
Dubai has some world-class malls, including a mall where only Chinese goods are sold.
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A frequent flier to Dubai, who used to buy jewellery and gadgets from there to sell in India at a marginal premium to cover his costs, said, "Making charges are higher in Dubai for jewellery, which reduces duty benefits and Dubai's currency is also appreciating against the Indian rupee, but the charm of jewellery bought from Dubai is huge among Indian consumers. He said that even cell phones which used to be much cheaper in Dubai than in India earlier have also lost that attraction after online mobiles have become available at cheaper prices during sale periods. However, tourists still buy them when they come to Dubai."
China has been informally putting restrictions on gold import since a month and as a result gold has turned 3-4 per cent costlier their due to a surge in the premium. Hence, Chinese tourists visiting Dubai have been seen buying jewellery.
Now, the curbs on gold in China seem to be taking on a formal form. The Shanghai Gold Exchange, the world's largest physical bullion exchange, said on Wednesday that it will curb the amount of gold that investors can trade at one time, a move analysts said would limit institutional investors' influence on prices.
