For UAE gold trade, India’s duty hike is a blessing

middle
By middle July 10, 2019 18:52

For UAE gold trade, India’s duty hike is a blessing

Dubai: India’s latest budget offers UAE’s gold and jewellery retailers a surprise gift … and they intent to make full use of it. By raising the import duty on gold to 12.5 per cent from 10 per cent, buying gold in India has become 2.5 per cent more expensive than in the UAE.

This is the first time since January 1, 2018 — when VAT was introduced in the UAE — that there is such a gap in pricing between these markets. For retailers and Indian shoppers here, this means the opportunities are once again there to take full advantage.

For instance, today’s gold price in the UAE is at Dh161.25 a gram, which with 5 per cent VAT will come to Dh169.25. The comparable price in India based on a 10 per cent import duty is Dh168.45 plus 3 per cent GST (Goods and Service Tax). With import duty rising to 12.5 per cent with more or less immediate effect, the price benefits from buying here becomes even more obvious. (Also, the making charges rise in India each time the cost of bullion increases.) “For UAE jewellery retailers, it’s a reason to be happy … but less so when you see what higher import duties will do to buying in India,” said Joy Alukkas, Chairman of the Joyalukkas retail network, which operates 28 stores in UAE. “Probably, the Indian government wanted to reduce consumption of gold, which is why they hiked the duty.

“But Indians will still want to buy their fill of gold — they will do so in places where they get clear price benefits. Dubai and the UAE will again fill that need. But the Indian government will also need to keep an eye out for those moving gold through “parallel channels”. The 2.5 per cent benefit is too attractive to pass up.”

India imported bullion valued at $30 billion plus last year. India is the second biggest consumer of the metal after China.

From the moment news broke that India would be hiking import duty, local retailers went into overdrive. “All sales staff have been sent WhatsApp messages to inform their contacts about the hike and to get the word out that the best way to benefit is buy gold here,” said Cyriac Varghese, General Manager at Sky Jewellery. “From only having a narrow price advantage after VAT came in, the 2.5 per cent increase widens it into a major boost for UAE jewellers.”

The price benefits will be magnified if the Indian rupee were to lose ground against the dollar. Right now, the rupee is hovering at 18.6/18.8 to the dirham.

Much the same will happen if international gold prices stick to the $1,400 an ounce plus levels and even move beyond the $1,450 mark. Because with each move higher, making charges in India tend to shift and will be reflected in the showroom pricing.

The perfect ‘gift”

“I am sure that the import duty hike will see the return of Indian buyers, especially tourists, wanting to buy costlier jewellery pieces. They had been absent for quite a while.”

Courtesy: GulfNews

middle
By middle July 10, 2019 18:52
Write a comment

No Comments

No Comments Yet!

Let me tell You a sad story ! There are no comments yet, but You can be first one to comment this article.

Write a comment
View comments

Write a comment

Your e-mail address will not be published.
Required fields are marked*

Digital Edition

    No posts where found

Read More

Social Follower & Like

Instagram @ Retail