India’s gold trade is staring at a potential loss of ₹6,000 crore this festival season as authorities clamp down on transport of the precious metal in poll-bound states, an industry official said.
Law enforcement agencies have seized gold consignments in Madhya Pradesh, Telangana, Rajasthan and Chhattisgarh, major consuming centres of gold where the model code of conduct is in place. Police and other agencies have been seizing intrastate and interstate consignments despite their being backed by the relevant documentation, according to Surendra Mehta, national secretary of nodal trade body India Bullion And Jewellers Association (IBJA), whose gold rates are used by the Reserve Bank of India (RBI) to price sovereign gold bonds issued on behalf of the government.
Mehta has written to election commissioners in the respective states to lift the blockade on the goods backed by proper documentation. Mint has seen a copy of the letter from IBJA to Madhukar Gupta, state election commissioner, Rajasthan.
“…it has come to our notice that bullion and jewellery moving in this state, whether intrastate or interstate, is being seized by the police department and other agencies citing election code of conduct in the movement of jewellery. Such bullion and gold jewellery are being seized in spite of the fact that movement of these goods is with all relevant documents under applicable GST (goods and services tax) laws (sic),” read the letter signed by Mehta.
“With the ongoing festival season and wedding season ahead, the performance of our sector will be badly affected, including loss of work to goldsmiths who are the backbone of our industry and also recognised as a key contributor to our GDP (gross domestic product).”
Mehta said Indians consume 100-120 tonnes of gold between Navratri and Diwali as part of festive purchases and for weddings thereafter. The four states account for around 10% of the total consumption, resulting in a potential loss of ₹5,560-6,000 crore if the goods can’t move, he said.
“Given the seizure of goods based on model code of conduct despite being GST-compliant, we are advising our members to hold consignments to and from these states until the relevant authorities approve their movement,” Mehta added.
IBJA has requested the state election commissioners to allow the movement of the goods if they are accompanied by relevant documents under GST law.
An official of a listed jewellery chain said on condition of anonymity that the movement of valuables like gold “typically faces hurdles” during elections.
“We have our documentation in place, and our goods are insured by a third party that transports the same from manufacturer to jeweller or from one outlet to the other. But we are facing issues of movement of the same for purposes such as promotions at exhibitions, etc.,” the official said.
India is the world’s second-largest consumer of gold after China. It consumed 158.1 tonnes of gold in the second quarter of 2023, second only to China, which consumed 181.5 tonnes, according to the World Gold Council (WGC).
Source: Mint
