The central government's decision to increase the import duty on gold has caused a noticeable decline in customer footfall at jewellery stores across Goa. The move, which raised the basic import duty from 6% to 15% on gold and silver, has dampened buyer sentiment. Many customers are now opting to exchange their existing gold ornaments for new designs instead of making fresh purchases.
Sharp Drop in Gold Demand
According to Pramit Raiker, president of the Goa Gold Dealers Association, the policy change has led to a collapse in gold demand by nearly 20-30%. The total effective tax burden on gold, including GST, has surged from 9.2% to 18.4%, prompting consumers to pause their spending. Raiker noted that more than 70% of walk-in customers are now recycling their old gold to create new jewellery.
Impact During Wedding Season
The price hike coincided with the wedding season, traditionally a peak period for gold purchases. A jeweller from Margao reported that many customers have reduced the quantity of gold they buy. The gems and jewellery industry, facing immense pressure, has urged the central government to overhaul and revive the Gold Monetisation Scheme (GMS) to stimulate demand.
Call for Industry Consultation
Raiker emphasised that the gold monetisation scheme could help revive demand and support jewellers, artisans, and craftsmen. He stressed the importance of consulting industry members before relaunching the scheme. A jeweller from Panaji expressed concerns about sustainability, stating that if demand continues to fall, he may have to lay off some of his 20 workers.
Silver Lining: Price Correction
On a positive note, gold prices have corrected over the past three days, mirroring a steep decline in global bullion markets. Gold recorded its biggest single-day fall in more than two months due to easing geopolitical tensions and monetary policy interventions. Raiker reported that gold prices have dropped by Rs 6,000-7,000 in the last few days, and the impact on customer behaviour will be clearer in the coming week.
Jewellers Offer Incentives
To attract customers, some jewellers are offering incentives such as discounts or full valuation of old gold ornaments. The industry remains hopeful that the price correction and potential revival of the gold monetisation scheme will help stabilise demand in the long run.
