'Customers are coming in; if they aren't buying, they are at least visiting the stores, which was not the case before the Budget.'
A woman tries a gold necklace at a jewelry store in Mumbai, October 24, 2023. Photograph: ANI Photo
Jewellers are seeing a rise in demand as buyers flock to stores to buy gold after the government cut the import tax on gold, silver, and platinum in an effort to reduce the smuggling of these precious metals.
The prices of all three metals have declined, and Zaveri Bazaar -- Mumbai's jewellery hub -- has witnessed a 60 to 70 per cent increase in customer traffic.
The government has reduced Customs duties on gold bars to 6 per cent from 15 per cent; gold dore now only attracts a 5.35 per cent Customs duty, while silver bars have a Customs duty rate of 6 per cent, and silver dore has a rate of 5.35 per cent. This has caused the prices of gold and silver to correct across the country.
The same trend has been observed in Delhi, where jewellers, who saw hardly any walk-ins before the Union Budget, have now experienced at least a 50 per cent increase in store footfall.
"Customers are coming in; if they aren't buying, they are at least visiting the stores, which was not the case before the Budget," Yogesh Singhal, chairman of the Bullion and Jewellers Association based in Delhi, told Business Standard. He added that customers are now buying jewellery for the wedding season, which will start in October.
"Customers typically buy jewellery a couple of months before the wedding while they are preparing for the upcoming celebrations," Singhal added.
In Mumbai's Zaveri Bazaar, Kumar Jain, spokesperson for the India Bullion and Jewellers Association, also noted, "Walk-ins have gone up by 60 to 70 per cent in Mumbai as customers are coming in to buy jewellery ahead of the wedding season and also for investment."
Jewellery chain Kalyan Jewellers has also seen an increase in the number of enquiries following the cut in duty rates.
"Following the implementation of the revised gold prices, we have observed a substantial increase in customer enquiries regarding the price of gold and our seasonal offers," said Ramesh Kalyanaraman, executive director, Kalyan Jewellers.
"This surge in interest reflects positive consumer sentiment towards gold, which has been India's most preferred investment option. Although we have not observed a major uptick in walk-ins until midday, we are confident that the price change will drive jewellery demand going forward."
On the Budget announcement, Kalyanaraman said the new tax regime, with its focus on increased disposable income, will boost demand for jewellery as consumers will invest in asset creation.
"Rationalising Customs duty on precious metals, particularly gold, is a welcome move, considering the significant arbitrage in gold prices that existed," said Ajoy Chawla, CEO of the jewellery division at Titan Company.
"Hopefully, this will reduce informal and unofficial gold inflows into the country and also provide much needed relief on gold rates to Indian customers just ahead of the forthcoming festival and wedding seasons. Tanishq has lined up exciting new collections, promotional offers, and regional festival campaigns this quarter to further stimulate consumer demand," Chawla added.
