SynopsisIndustry executives said promoting sales of lower carat jewellery like 14K and 9K can reduce imports by 20-30%, and discouraging investments in gold bars and coins can reduce imports by another 20% -30%. India annually imports 750-800 tonnes of gold to meet its demand. Revamping the Gold Monetisation Scheme can also help the government to tap 25,000 tonnes of grandfather stock.Listen to this article in summarized formatSmuggling, loans against jewellery to riseKOLKATA: The high import duty on gold will bring down volume demand for the precious metal by 10-15% and push out old gold into the market as Indian households will leverage the high price, helping address the country's current account deficit. It is estimated that around 25,000 tonnes of idle gold is locked up in Indian households."We are expecting a lot of old gold to enter the market. Volume sales of gold will come down because of the high price," said B Govindan, chairman of Bhima Jewellers."Smuggling of gold is expected to rise and more people will take gold loan against jewellery to offset inflation," said Surendra Mehta, chairman of India Bullion & Jewellers Association, Earlier, during the higher duty regime, nearly 100-120 tonnes of gold used to enter the country through the grey route, he added.Austerity drive: Duty hike pushes up bullion prices by 7%India already holds an enormous quantum of gold in their households, much of it being idle. If even a fraction of that is brought back into the circulation through formal exchange and recycling, pressure on fresh import easesIndustry executives said promoting sales of lower carat jewellery like 14K and 9K can reduce imports by 20-30%, and discouraging investments in gold bars and coins can reduce imports by another 20% -30%. India annually imports 750-800 tonnes of gold to meet its demand. Revamping the Gold Monetisation Scheme can also help the government to tap 25,000 tonnes of grandfather stock.Fertiliser subsidy may surpass budgeted estimates by Rs 70k crVarghese Alukkas, Managing Director of Jos Alukkas, which has presence in five southern states, said, "Following this duty hike, there will be a rush among customers to sell old gold jewellery for cash."Incidentally, nearly 50 per cent of sales of big jewellery retailers are now through old gold exchanges.The duty revision may lift retail jewellery prices in the near term, and customers, particularly first-time and investment-led buyers, will take a moment to recalibrate.“What we expect over the coming quarters is not a contraction in demand so much as a shift in how that demand is met. Exchange of old gold for new jewellery, already a Kiritngful share of transactions at organized retailers, will become the dominant mode of purchase,” said M.P. Ahammad, chairman of Malabar Group.Diamond jewellery may gain traction in this scenario as the gold content is much less in studded jewellery. “I think it would help the sale of diamond jewellery,” said Ishu Datwani, founder and director of Mumbai-based Anmol Jewellers.Exporters too will face problems over the hike in duty on gold and silver. The Gem & Jewellery Export Promotion Council feels that hiking import duties rarely curbs gold imports—it merely inflates prices."Despite gold prices doubling recently, imports have not declined proportionally. Such measures often fuel smuggling and escalate export costs. Exporters now face bank guarantees of Rs 28-30 lakhs per kg of duty-free gold from nominated agencies, severely blocking working capital and stifling exports,” said Kirit Bhansali, chairman of Gem & Jewellery Export Promotion Council (GJEPC)Read More News on...moreless