GJF suggests slew of measures on gold front

Faced with severe shortage of gold that has put artisans out of jobs and manufacturers out of business, jewellers body GJF today suggested a slew of measures, including making at least partial use of 25,000 tonnes of the precious metal lying in the country.

"Due to recent restrictions on gold import, there is a huge short supply in the market, paralysing the jewellery industry and putting artisans out of jobs and manufacturers out of business," the All-India Gems and Jewellery Trade Federation (GJF) Chairman Haresh Soni told reporters here.

The hike in import duty to 8% has encouraged smuggling of the precious metal, while the ban on gold shipment on consignment has created tight supply situation and gold premiums have also increased, he said.

GJF recommended slew of measures to bring down gold imports as well as to ensure smooth supply of the metal for survival of jewellery businesses.

 Firstly, the industry body suggested that the country is estimated to have a huge stock of 25,000 tonnes of physical gold costing about $1.25 trillion at current price and this should be put in use.

"One can view $1.25 trillion value of physical gold as dormant savings of the economy and has not been put to productive use towards capital formation. If even 10% of these dormant gold savings is taken out, we need not import gold for next 3-4 years," it said.

Secondly, ensure smooth supply of gold for jewellery makers by lifting the ban on overseas purchase of gold on consignment basis, change baggage rule for NRIs for import of gold from one kg to 10 kg and allow gifting of gold by NRIs.

Thirdly, curb import of gold by high net-worth individuals (HNI) and star trading agencies and allow only banks to import the yellow metal for true consumption.

According to the GJF, the above three measures will help government to bring down gold shipments by at least 300-400 tonnes in a year.

Gold consumption in the April-June period of the current fiscal is estimated at 335 tonnes. India, the world's largest consumer, imported about 860 tonnes of gold in 2012.