If any nation is happy about India’ gold import curbs it is the UAE, where bullion traders are registering brisk sales given the restrictions on the import of the precious metal in India.
The curbs on gold in India have raised demand for gold and diamond studded gold jewellery among expatriate Indians and visitors from India to the UAE.
“The UAE’s gold trade has become the de facto beneficiary of the Indian government’s tough stance on domestic consumption. There is almost a 16% difference on a per gram basis, in buying gold ornaments in the UAE as compared to buying gold in India,” said an official at a store in Dubai’s gold souk.
Joy Alukkas, chairman of bullion-major Joy Alukkas Group said, “The existing rules were meant to reduce imports into India. For a businessman who is active in the gold industry, it would be a good measure if gold restrictions were removed.”
He added that given the demographic mix in the UAE, the majority of gold jewellery consumed locally has an Indian design motif.
The UAE is the top destination for gems and jewellery out of India, with volumes totalling $14.37 billion last year, followed by Hong Kong at $9.86 billion, and the US at $4.79 billion.
Retailers state there is an increased volume of Indian-made jewellery into the UAE, following rules that India’s bullion exporters need to export 20% of their local bullion offtake, to get their hands on more bullion.
“Prices in the UAE have seen an average drop of 2% in the last two months. Local wholesalers are buying more of Indian-made jewellery, which is then released to local retailers,” said Shamlal Ahmad, managing director at bullion retailer, Malabar Gold and Diamonds.
He added that given the intensely competitive retail environment in the region, the lower price points were being passed on to the shopper. “At the end of the day, it is the customer who benefits,” he said.