Gold is regaining its sheen after a year of subdued demand. According to a report from the World Gold Council, the uptake for gold in India for January-March this year was 124 tonnes, up 15% compared with the overall demand for the same period in 2016. City-based jewellers also find the same increase from last year, when business was dull owing to high gold prices and the strike by jewellers.
N Ananthapadmanabhan, MD, NAC Jewellers, said while the demand this year is 1015% more, the business has been average due to competition as more jewellery chains are coming up. “Demand is back and we are not losing out on business, but we are not able to register significant growth,” he said.
Despite the spike in de mand compared with the previous year, it is still the second lowest in the five-year time frame from 2013. “Gold demand has increased compared to the previous year, but in absolute terms it is still low. It was close to 190 tonnes in 2015 and 167 tonnes in 2014. In fact, this quarter was the only one among the previous four quarters when jewellery demand went above 100 tonnes,” said P R Somasundaram, MD, World Gold Council, India.
However, the council has still to put up a conservative estimate of 650-750 tonnes as the annual demand, as it expects the introduction of GST to impact consumer sales.”Though the introduction of GST is widely welcomed by organised players -as it seeks to mandate transparency and enhance consumer value -there are concerns about the level of tax. We are putting up a conservative demand considering short-term challenges including PAN registrations, GST and restrictions on cash transactions,” Somasundaram added.
Jewellers, on the other hand, are upbeat about the introduction of GST and are hopeful about the organised players reaping the benefits. “This is the first time after demonetisation that we are seeing an uptick in the purchase that continued until Akshaya Tritiya.We’re eagerly awaiting GST to kick-start. We are hopeful that organised players will gain from a transparent tax structure,” said Jayantilal Challani, a city-based jeweller.