In an unprecedented move, top jewellery retailers and bullion traders across the country have decided to suspend sale of gold coins and bars for six months. The measure is aimed at helping the government curb imports and keep the current account deficit under check .
Several prominent chains, including TBZ, Gitanjali, Tanishq and Mukesh Ambani’s Reliance Jewels, will voluntarily stop sales. Coins and bars account for more than a third of gold sales in the country. India is the world’s largest gold buyer, at 860 tonnes a year. Market estimates suggest that the demand for coins and bars surged 150% in the past four years.
The move by top jewellery retailers and bullion traders to suspend sale of gold coins and bars for six months comes at a time when the government and the Reserve Bank of India have asked banks to go slow on selling gold coins and bars and players such as Anil Ambani’s Reliance Capital have pulled out of the business.
Although the government had taken several steps to tame sales, the impact has been slow and it was only in June that there were signs of demand cooling down.
While consumers will find it tougher to get hold of gold coins, retailers will not be hit due to the low profit margins. Against a profit margin of 8-12% on diamond and gold jewellery, the margin on coins and bars is as low as 1-2%.
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