All that glitters, but on a budget: Gujaratis pick smarter options

Written By: Yashaswi Kochar

On May 10, Prime Minister Narendra Modi urged people not to purchase gold for a year to protect the rupee amid global economic uncertainties. India is the second largest consumer of gold after China; however, more than 80 per cent of its gold is imported. Following the speech, the import duty on gold was raised to 15% from 6%. Today the price of 24K for 10gm is ₹ 1,55,180.

For Indians, gold has always had a deeper meaning than just a metal; it is tradition. “Jewellery purchases are emotionally important in India. Gold also works well as a hedge against inflation and economic uncertainty. Gold has consistently created long-term value, which is why Indian families continue trusting it generation after generation,” says Harshil Ranpura, director of an Ahmedabad-based jewellery store.

“Gold and jewellery are deeply connected with India’s economy. At this juncture, it is important for the trade fraternity to avoid panic and continue business with confidence and responsibility,” says Avinash Gupta, Gems and Jewellery Domestic Council of India. We take a look at this major shift.

‘People are buying lighter jewellery’

As gold still remains an integral part of our weddings, one cannot really stop buying gold. “As a businesswoman who’s also running a household, I believe gold isn’t just an investment. A lot of emotions and traditional values are connected with purchasing gold. However, I do believe that the message by the Prime Minister is to safeguard national interest. So, the solution is simple- purchase gold that is necessary. If there is a function or a purpose to buy gold jewellery, then one shouldn’t hold back. But if it is just for the sake of investment, it can be avoided as there are many other options like bonds, to explore. In fact, I believe that if there is a chance for investment, why not explore businesses in health or food sector, which in turn also benefits the economy of the country? Through these measures, traditions and progress can go hand in hand,” says Roma Patel, CEO of a food manufacturing company and a homemaker.

Explaining customers’ purchasing behaviour, Gaurav Kothari, a Surat-based jeweller, says, “Customers have not stopping purchasing. They are now choosing lighter jewellery and smaller quantities. Daily wear and lightweight designs are in higher demand. People still want to buy gold, but in a budget-friendly way.” He adds, “Interest in diamonds, silver, and platinum is increasing. Many companies have now started manufacturing jewellery in 9K instead of traditional 14, 18 & 22K jewellery. Silver jewellery with lab-grown diamonds is trending among young buyers.”

Talking about gold as an investment, Mumukshu Desai, a financial expert, suggests, “Gold should be an integral part of any investment portfolio. A general rule suggests that around 10% to 20% of the portfolio can be allocated to precious metals, namely gold and silver combined. This can be achieved easily by starting a long-term SIP in gold ETFs (and silver ETFs) and staying invested over the long run to meet future financial milestones.”

‘Gold is cheaper today, costlier tomorrow’

While footfall has not declined yet, jewellers expect it to. “There has not been a major impact on purchases at this moment. Wedding customers continue to buy gold,” shares Vaishali Shrimal, a jeweller. “Jewellers are introducing lightweight and affordable collections. Many stores are offering EMI plans and schemes. The industry is adapting to changing customer needs,” adds Gaurav.

Harshil says, “At the retail level, jewellery demand may slow due to high prices, but investment demand in raw gold, coins, and bullion tends to increase during such periods. Investing in gold makes sense irrespective of current prices because in our industry, we strongly believe in one simple rule: “Gold is cheaper today and costlier tomorrow.”

Alternatives for gold
● Silver
● Platinum
● Mutual funds/ SIPs
● Stocks / equities
● Government bonds
● Digital gold & gold ETFs

What experts say:

GJC and the entire gems and jewellery industry respect the government's policy decisions taken in the larger national interest. We believe the increase in customs duty is a temporary and calibrated measure in the present economic scenario. We will continue to work closely with the government and all stakeholders to ensure stability and sustained growth of the industry.”

-Rajesh Rokde, Chairman, Gems and Jewellery Domestic Council of India

All of us are aware of the global crisis, and if the Prime Minister is asking to not buy gold for a year, it should be considered positively. Gold is associated with our tradition, but that can be a conscious purchase for a year. If you 'have to' buy gold, say on auspicious days as a shagun, buy a 10gm or 20gm jewellery piece. This is also a good time to explore repurposing. One can take their mother's or grandmother's jewellery set to their trusted jeweller, who can polish or repurpose the jewellery entirely, which will be more efficient than purchasing the entire new set.

-Chirag Khambati, marketing manager at an MNC

– Inputs by Kanksha Vasavada and Shikha Shah