Along the narrow lanes of Mumbais historic Zaveri jewellery bazaar, many shops display placards saying we buy old gold jewellery, tempting buyers who face a $125-an-ounce premium over London prices as the government cracks down on surging imports.
My brother is getting married next month, and we require jewellery for the bride, said 35-year-old Shazia Iqbal Ahmed, who brought in bulky bangles and a necklace to be recycled. The family thought it was better to make use of our old jewellery sets for the new bride. We will end up saving R50,000 on just the premium. Its profitable for us at the end.
About 1 million couples are expected to marry in the current wedding season, which has 71 auspicious wedding days and runs through to May. About 33,000 weddings took place on November 19 alone, the most of any day this year.
Gold is always in demand, with a typical gift of a pendant, earrings or a ring, weighing 5-10 grams depending on financial circumstances. Parents of the bride generally give heavier items like a necklace or bangles weighing 50 grams or more.
But a government clampdown on runaway gold imports that fuelled a blow-out in the current account deficit has led to new rules imposing higher duties, limiting imports and making it hard for jewellers to source supplies.
Jewellers say the move could help mobilise more of an estimated 20,000 tonne of gold stored in Indian households, some 35 times the Reserve Bank of Indias official reserves.
In this wedding season, since there is no gold available in the market, people have started coming with recycled gold. They have started exchanging the old gold for new and pay the labour charges, said
Kumar Jain, who owns a retail gold shop in the Zaveri Bazaar.