The bullion and jewelry trade, which sustains lakhs of workers, artisans, and small support businesses, is bracing for uncertainty after the steep hike in import duty on gold and silver and PM Modi’s recent appeal to defer gold purchases. Traders say any slowdown in demand could hit laborers and skilled workers the hardest in a market already weighed down by weak business conditions.
Industry representatives estimate that nearly 35 lakh people could face either direct or indirect consequences if gold demand weakens following the steep increase in import duty on gold and silver from 6 percent to 15 percent. Beyond jewelers and
traders, the ecosystem also supports small ancillary businesses involved in packaging, printing, and supply services.
“There was no advisory, and everything has been sudden,” says Aryan Shah of Anguthi Jewelers 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”
he says.
Sayyam Garg, owner of Agrawal Silver in Ahmedabad, says, “I do not see a bright future in six months. These workers were already struggling as the business has not been so good,” he points out.
Those associated with the trade point out that a slowdown would hit workers the hardest, especially the artisans or kaarigars. Many traders say these workers possess highly specialized 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 the gold buying will be
affected at least by 50-60%.
Prashant Chokshi, a fifth-generation jeweler at Tejas Jewelers, says, “Gold is handy for the people. Banks may reject loan applications but readily offer loans against pledged gold.” He says he knows of several who have not renewed their fixed deposits and instead have purchased gold in the last few months.
Says Mittial Ghiya, president of Jewelers Association M. G. Road, Vadodara, “Workers will be 100% affected, and the real impact will be felt from July because the workers currently have orders on hand that are to be completed. There are an estimated 22,000-25,000 workers in Vadodara.
However, a wealth management expert from Ahmedabad says that the PM’s appeal would affect the big jewelers, an indication of which was seen in their stock prices soon after the PM’s statement. The big jewelers came up with advertisements pushing for recycling. “Small and mid-segment jewelers won’t be affected,” he claims, saying people also have an option of buying sovereign gold bonds.