Jewellers are offering discounts of up to 50% on making charges to attract consumers in the ongoing festive season in the hope that the surge in rural demand will more than make up for the almost 10% higher gold prices this year, high import duties and a closer watch by the tax authorities on sales.
On Wednesday, gold price in the physical market was hovering at around ` . 29,747 per 10 gm, 9.6% higher than that a year ago but nearly 7% lower than last month’s peak of ` 32,000.
“The (recent) drop in gold price will definitely drive demand this festive season. Better monsoon has raised hopes of a better crop this year and this is expected to be re flected in this year’s festive buying,“ said Somasundaram PR, managing director, World Gold Council India.
He said the industry faced a 42day strike from March 1, which af GURURAJ fected demand. Akshaya Tritiya did not see much demand either as market sentiment was poor and purchasing power in rural India was affected by two successive droughts. In the first half of 2016, gold demand in India fell 29.6% to 247.4 tons from 351.5 tons a year ago. Jewellers in both organised and unorganised sectors hope festive demand will be 10-20% higher than last year. Unorganised players account for about 80% of Indi . 2.7 lakh crore gold jewellery a’s ` market. After a depressing first half this year, jewellers have increased discount on making charges to 50% from 20% last year on gold jewellery while some are offering as much as 100% discount on diamond jewellery. The duration for such discounts has also risen from 15 days last year to two months this time round.
“Our margins have halved from 510% to 4-5%. But that is the only way out to see the business moving,“ said Saurabh Gadgil, national director, India Bullion & Jewellers Association. Higher discounts can also help avoid mandatory submission of PAN by customers.
The government had on January 1 made submission of PAN mandatory for jewellery purchase worth . 2 lakh and above, which, accor` ding to jewellers, has affected gold sales in the country by 10-15%.
Kolkata-based Senco Gold & Diamonds is sponsoring a TV soap opera that revolves around a family that is engaged in gold trade, resorting to an innovative attempt to shore up sales during the festive season. “We are showcasing some of our exquisite gold pieces in the serial to lure customers,“ said managing director Suvankar Sen.
The organised sector dominated by the likes of Titan Company, through its jewellery business Tanishq, and PC Jeweller, expects a healthy volume growth during the festive season.