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India?s financial tsars are bent on doing the UAE?s gold and jewellery trade favours. In the latest turn, they have raised import duties that retailers in India have to pay from 10 per cent to an even more substantial 15 per cent. (The import duty on bullion remains at 10 per cent)
What this does, as well as the earlier duty increases, is widen the gap between the retail cost of jewellery in the UAE/GCC and what one has to pay for the same in India. Factor in a still weak rupee against the dollar – and by extension the dirham – and the gains multiply for an Indian buying jewellery from here. (In Dubai, a gram of 22K gold was quoting at Dh148.5 (Rs2,552.71) at the opening of trade on Wednesday, while in India it was Rs2,725 a gram. For the record, gold values have dropped more than 20 per cent in the year to date.)
It then stands to reason that if there is a slump in demand for gold jewellery within India as a result of the higher showroom prices, it will be compensated by that demand getting diverted to other markets within a few flight hours. It places the gold trade in Dubai and the GCC at an advantage. Particularly, when the peak demand season – all through the fourth quarter – for Indian gold buying is just about to get into its stride.