The bullion and jewellery trade, which sustains lakhs of workers, artisans, and small ancillary businesses, is bracing for uncertainty following the steep hike in import duty on gold and silver and Prime Minister Narendra Modi’s recent appeal to defer gold purchases. Traders say any slowdown in demand could hit labourers and skilled workers the hardest in a market already weighed down by weak business conditions.
Industry players estimate that nearly 35 lakh people could face direct or indirect consequences if gold demand weakens after the sharp increase in import duty on gold and silver from 6% to 15%. Beyond jewellers and traders, the ecosystem also supports several small businesses engaged in packaging, printing, and supply services.
Trade nncertainty deepens
“There was no advisory, and everything has been sudden,” said Aryan Shah of Anguthi Jewellers in Ahmedabad. “As such, there was no upside in the business due to multiple factors like the weak stock market, job losses, and the West Asia crisis,” Shah added.
Sayyam Garg, owner of Agrawal Silver in Ahmedabad, said: “I do not see a bright future in the next six months. These workers were already struggling as the business has not been doing well.”
Those associated with the trade point out that any slowdown would hit workers the hardest, especially artisans or kaarigars. Many traders say these workers possess highly specialised skills and may find it difficult to shift to alternative employment in an already weak job market. Jitendra Gehlot, owner of Subhlaxmi Jewellers, fears that gold buying could decline by at least 50-60%.
Prashant Chokshi, a fifth-generation jeweller at Tejas Jewellers, said: “Gold is handy for people. Banks may reject loan applications but readily offer loans against pledged gold.” Several people, he added, have not renewed their fixed deposits and instead purchased gold in the last few months.
July may bring slowdown
Mittial Ghiya, president of the Jewellers Association, MG Road, Vadodara, said: “Workers will be 100% affected, and the real impact will be felt from July because workers currently have orders on hand that need to be completed.” There are an estimated 22,000-25,000 workers in Vadodara, he said.
However, a wealth management expert from Ahmedabad said the Prime Minister’s appeal would mainly affect large jewellers, an indication of which was reflected in their stock prices soon after the PM’s statement. Large jewellers also rolled out advertisements promoting recycling. “Small and mid-segment jewellers will not be affected,” he said, adding that people also have the option of investing in sovereign gold bonds.