Reeling under the pressure of demonetisation and Goods and Services Tax (GST) that suppressed sales, gold jewellery firms are throwing discounts and offering freebies to attract customers on the occasion of Dhanteras and Diwali.
The past two reforms by the central government have impacted sales of gold jewellery for the past nine months. In a desperate move, the jewellers have adopted such moves hoping to see an upturn in sales figures, the Times of India reported.
Many from the industry believe that customer sentiments were restored after the government revoked the PAN and Aadhaar card clause. Earlier, the government had said that PAN and Aadhaar numbers were mandatory for purchases of gold and diamond above Rs 50,000.
Jewellers explained that over 50 percent of their customers buy gold below Rs 1 lakh.
Jewellers also said that sales during the wedding season this year -- that span five months between November and March -- has witnessed many years' low because of demonetisation.
Again, just when the industry was slowly returning back to normalcy, the government rolled out GST and put three percent GST on gold jewellery — which in the pre-GST tax regime stood at two percent.
To offset the GST hike and revive sales, jewellers are now trying to tap the Dhanteras and Diwali period by offering heavy discounts on making charges and assured gifts.
"We are offering 25 percent discount on making charges and 10 percent discount on diamonds and precious stones. Old gold ornaments can also be exchanged for new," TOI quoted Uday Chandra, managing director of PC Chandra Jewellers.
"The current price correction offers an opportunity for investors and individual consumers to buy gold ahead of a possible rally based on strong fundamentals. In fact, the downside is very limited in gold. Prices are expected to rebound from the current level," added Gnanasekhar Thiagarajan, Director, Commtrendz, a Mumbai-based equity trading and research analytics firm.
Rupak Saha, the owner of Kolkata based Shyam Sundar Co Jewellers, said that the steady price of gold over the past couple of months has boosted confidence among customers. "Though the situation hasn't been conducive in the past one year, gold prices have firmed up in the past 10-12 days," he said.
