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Self-regulation by GJF

GJF appeals to suspend the sale of gold coins, bars and low value added products to consumers with immediate effect.
The government thinks that gold is majorly responsible for the widening Current Account Deficit (CAD), which is not true, according to GJF. The measures taken by the government till date has not yielded substantial positive results in reducing the CAD, which is frustrating the government and compelling them to take more strict measures. Yesterday the Honourable Finance Minister stated in the parliament that the import duty on gold and silver may be raised again, and finally the import duty has gone up from 8 to 10% and silver is gone up from 6 to 10%.

Haresh Soni, Chairman, GJF said, “we at GJF have analysed the situation and have proposed to the government that we will take voluntary self-regulation steps before the government imposes further restrictions. We, as GJF, appeal to suspend the sale of gold coins, bars and low value added products to consumers. With immediate effect.”

The guidelines are : no gold coin stock to be maintained across country; no gold coin orders to be undertaken; Bullion bars also similarly to be suspended completely to consumers/ High-Net worth individuals/ corporates/ institutions/ HUFs, etc – complete suspension; Bullion dealers, jewellers, manufacturers, Importers, banks, NBFCs, all are requested to suspend the above with immediate effect and suspend low value addition product sales i.e lower than 6%.

This is a self-regulation by the industry. “We will need to demonstrate to the FM within 3 months that imports have reduced. We as responsible trade body are recommending this voluntary suspension. Our interaction with trade at IIJS has shown great acceptance to this thought process. We do hope that we will get the cooperation from all members across India. We, as GJF, have promised this action in person with the Hon Finance Minister, Chidambaram in our meeting, on August 7, 2013.

On our part we have been speaking to all major players, chains, independent jewellers and we are happy to inform you that they have actively suspended or in process of taking the decisions in their respective managements. We hope to achieve this voluntary suspension within 10 days,” he added. “We have seen the result of this, partially, already. In reducing the import of gold in June 2013 to 31.5 tons from 162 tons in May ’13. The July’13 import has also come down by 35% in comparison to July ’12. But import in July is double in July 13 in comparison to June13 which is, maybe, in view of IIJS. We remind you that approximately 300 tons of gold is consumed in India every year for “investment-non essential-low value added-sale” purposes.

In view of ensuing wedding and festive season we need gold for our jewellery and for our artisans with higher profitability. If we do not restrict the consumption in the form of coins and bars, and other low-value addition products, (lower than 6% value addition), we will not be able to provide gold to our artisans for manufacture of jewellery and we will face the collapse of the business.”

All the retailers are advised to promote old gold and incentivise old gold from consumers. The government including the FM has used the words “DRACONIAN MEASURES” to be introduced to save the country from down grading by international rating agencies, in their personal conversations with the GJF. The FM has requested GJF personally to help the government in their hour of crisis. In view of the above GJF has requested to suspend the sale of Gold coins and Bars to consumers for 6 months till GJF informs otherwise.