)
As the government makes an increasing effort to discourage import of gold and make it less attractive, jewellers have intensified efforts to sell gold jewellery, offering several incentives and concessions to customers. This has resulted in keeping prices lower or nullified the burden of the increased import duty.
Though the government had announced a six-fold increase in import duty on gold in the past 14 months, jewellers have so far been able to nullify its impact through offers such as a ‘gold accumulation scheme’ and hefty discounts on making charges.
Take, for instance, the latest such offer, from Gitanjali Gems. Through its Swarna Mangal gold and Shagun diamond jewellery accumulation plans, the company offers a 4.5-times free bonus on the customer’s monthly deposit instalment for the 24-month scheme. Also, the company offers up to 60 per cent discount on making charges for gold jewellery at the time of redemption.
With these, the total annual return for a customer is 19 per cent under the accumulation plan, in addition to an average six per cent discount on making charges (average making charge on gold jewellery works out to 10 per cent). This gives a customer a total annual return of 25 per cent by investing in Gitanjali’s gold and diamond accumulation plans, the highest from any jeweller in India.
“Our aim is to add at least 20,000 new customers in one year under these schemes. The primary objective behind such offers is to democratise diamond sales in India. At the same time, we also want to expand our horizon in gold sales through attractive offers,” said Mehul Choksi, chairman and managing director of Gitanjali Gems.
Such schemes are not new. Major peers such as Tanishq, Tribhovandas Bhimji Zaveri (TBZ) and PC Jeweller have been offering bonus instalments to customers for years.
Mumbai-based TBZ, for instance, offers 3.5-times bonus instalments for its 24-month scheme. For example, an investor would get ~17,500 additional at the time of redemption, if he chooses to invest ~5,000 a month. “This is just an additional service to our customers. Through such schemes, we have managed to understand our loyal customers better,” said Shrikant Zaveri, chairman, TBZ. PC Jeweller, the Delhi-based gold and diamond ornaments manufacturer and retailer, offers twice the monthly instalment as a bonus for just a 12-month scheme. All these schemes start with a minimum monthly deposit of ~1,000.
Despite government efforts, the country’s gold import was worth ~2,06,500 crore between April and December 12, 2012. Experts believe India’s gold import this financial year (ending on Sunday) would surpass last year’s value of ~2,69,500crore.
The World Gold Council, the global market development body for the gold mining industry, has been maintaining its oft-stated conviction on India’s unabated appetite for the yellow metal. David Lamb, its global managing director, jewellery, recently forecast India’s gold import at between 865 and 965 tonnes in 2013, higher than last year’s 864.2 tonnes.
“The government’s attempt would only make gold costlier for consumers. It would not work for reducing buyers’ appetite at all. The government will have to look for other options for (reducing) the CAD (current account deficit on the balance of payments),” said Ashok Minawala, an industry veteran and ex-chairman, All India Gems & Jewellery Trade Federation.
