GJF proposes Voluntary Self Regulation steps to curb gold imports

In view of the India government’s restrictions on gold imports to control the country’s current account deficit, and the Hon Fin Minister stating in the parliament that the import duty on gold and silver may be raised again, which finally brought the import duty on gold from 8 to 10 percent and silver from 6 to 10 percent, the GJF has proposed to the government that the industry will take Voluntary Self Regulation steps.

The government had attributed gold imports to be the major cause of the widening CAD, and thus has been implementing various policies to curb the same. GJF is of the opinion that the policies have not ‘yielded substantial positive results in reducing the CAD, which is frustrating the government and compelling them to take more strict measures’.

As such it proposed the VOLUNTARY SELF REGULATION steps before the government imposes further restrictions. In this it has requested industry members to suspend the sale of gold coins, bars and low value added products to consumers, with immediate effect.

The GJF has outlined some guidelines for the same -

No gold coin stock to be maintained across country

No gold coin orders to be undertaken

Bullion bars also similarly to be suspended completely to consumers/ High-Net worth individuals/ corporates/ institutions/ HUFs, etc - complete suspension

Bullion dealers, jewellers, manufacturers, Importers, banks, NBFCs, all are requested to suspend the above with immediate effect

Suspend low value addition product sales ie lower than 6%.

With this, the GJF is hopeful to demonstrate to the FM within three months that imports have reduced. ‘we as responsible trade body are recommending this VOLUNTARY SUSPENSION. Our interaction with trade at IIJS has shown great acceptance to this thought process. We do hope that we will get the cooperation from all members across India. We, as GJF, have promised this action in person with the Hon Finance Minister, Shri Chidambaram in our meeting, on August 7 the 2013’.

The GJF also noted that many of the major players, chains, independent jewellers have actively suspended or are in process of taking the decisions in their respective managements and the GJF is hopeful to achieve this VOLUNTARY SUSPENSION within 10 days.

‘We have seen the result of this, partially, already. In reducing the import of gold in June 2013 to 31.5 ton from 162 tons in May '13. The July'13 import has also come down by 35 percent in comparison to July '12. But import in July is double in July 13 in comparison to June13 which is, maybe, in view of IIJS. We remind you that approximately 300 tons of gold is consumed in India every year for "investment-non essential-low value added-sale" purposes. In view of ensuing wedding and festive season we need gold for our jewellery and for our artisans with higher profitability. If we do not restrict the consumption in the form of coins and bars, and other low-value addition products, (lower than 6 percent value addition), we will not be able to provide gold to our artisans for manufacture of jewellery and we will face the collapse of the business’, GJF noted.

All the retailers are advised to promote old gold and incentivise old gold from consumers. The government including the FM has used the words "DRACONIAN MEASURES" to be introduced to save the country from down grading by international rating agencies, in their personal conversations with the GJF. The FM has requested GJF personally to help the government in their hour of crisis. And GJF has requested the industry members to suspend the said sale for six months till GJF informs otherwise.

GJF will declare names of those jewellers who have decided to suspend sales of coins, bullion and low value added products within two days. It has requested the members to communicate with its coordinating committee for the same.