UAE gold trade and Indian shoppers will keenly follow any change on Budget day.
Jewellery retailers are hoping gold prices in the UAE will retain the 15 per cent lower cost advantage over Indian retail rates after tomorrow’s presentation of the 2023-24 federal budget by the Finance Minister Nirmala Sitharaman.
India currently imposes 15 per cent import duty in bullion, which was raised in 2019 from 12.5 per cent as the Indian government bid to control domestic demand for gold and jewellery and thus save on precious dollar reserves. But apart from a drop in demand during 2020 brought on by the lockdowns during Covid, Indian’s appetite for gold has run consistently high. That’s been a major boost for gold retailers in the UAE, with gold prices around 15 per cent lower than what resident Indians get from jewellery showroom in India.
“This means just about every Indian visitor to the UAE is making a trip to a gold store here – and they’ve been buying even when UAE gold rate went past Dh200 a gram for 22K,” said a jeweler.
Now, there is speculation that FM Nirmala could bring down the import duty on gold when she presents the government financial plans and economic targets on Wednesday. A key reason, according to sources, is that India wants to cut down drastically on smuggled gold being brought into the country.
“What I understand is that the Indian Ministry of Commerce has sought a reduction with the objective to push India’s jewellery exports as well as the manufacturing in the gems and jewellery sector,” said Anil Dhanak, Managing Director of Dubai-based Kanz Jewels.