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Mumbai's Zaveri Bazaar loses sheen as gold import tariff kicks in
Footfalls have plummeted; customers are entering stores, checking prices and leaving without making purchases, said salespersons
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MUMBAI: Jewellers at Zaveri Bazaar are putting up a brave face but the mask is beginning to slip. It’s been just three days since the prime minister urged Indians to pause gold purchases for a year, to help shore up slipping forex reserves. But the guillotine fell on Wednesday, when the government raised import tariffs on gold and silver, from 6% to 15%.
“Footfalls have plummeted. Customers are entering stores, checking prices and leaving without making purchases. Many are waiting to see where prices stabilise,” said a seasoned bullion trader at Zaveri Bazaar, India’s largest gold jewellery market in Bhuleshwar, in South Mumbai.
A senior salesman at a leading showroom said walk-ins have nosedived. Usually, around 50 people walk in throughout the day, with around 20 making purchases. On Wednesday, only eight people walked in all day, and we made only three sales,” he said.
Spread across a warren of narrow lanes, Zaveri Bazaar is over 200 years old and remains the nerve centre of India’s gold trade. Jewellers here are particularly worried as business had already slowed over the last six months and the ongoing West Asia crisis has fuelled volatility.
“The full impact of the prime minister’s austerity call will become clear only in the next two weeks,” said Mahesh Lohar, owner of Sangam Jewellers in Kandivali. “There is no real alternative to gold. Despite this dip, people will continue buying it,” he added but the hesitation was hard to miss.
On May 13, gold prices touched ₹1.66 lakh for 10 grams after hovering at record highs, forcing many buyers to postpone purchases, especially jewellery. “Gold and gold jewellery are primary investments for lakhs of Indians. Now everyone is in a panic. With the increase i n import tariff, we expect jewellery prices to go up by around 10%,” said another jeweller.
Another jeweller, crestfallen at the turn of events, said, in May last year, 24 carat gold in Mumbai was around ₹9,500 per gram. Today, it is around ₹15,000.
Gold and gold jewellery have always held emotional significance for Indians, who in good times make generous purchases during wedding season and festivals. “Wedding season is approaching and yet demand has been tepid ever since the prime minister urged Indians to stop buying gold for a year,” said Kumar Jain, owner of UT Zaveri, a century-year old showroom in Zaveri Bazaar. “Instead of making purchases, we have been encouraging customers to bring their old gold and make ornaments from it,” he says.
“Gold prices have increased so sharply that middle-class families are either buying lighter jewellery or postponing purchases,” said a jewellery manufacturer in the bazaar.
Some jewellers have started offering lighter designs, flexible payment options and exchange schemes to attract customers. Some stores are witnessing an uptick in enquiries for old gold exchange and customised jewellery instead of fresh purchases.
Sources said each goldsmith at Zaveri Bazaar works on 300 grams of gold through various orders. Now, many units are reporting fewer orders from retailers and some say fresh orders are being withdrawn.
The bullion market has become increasingly volatile. Surendra Mehta, national secretary, Indian Bullion and Jewellers’ Association, said the austerity move would force demand to fall by 10%. “We expect illegal imports to resurface. We also expect more people to take gold loans against jewellery to offset inflation,” said Mehta.
To tide over the situation, various associations and councils will meet this week to find a solution to the current predicament.
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