MUMBAI (Reuters) - Indian gold traders are rushing to apply for import licences after the government lowered the bar to ease supply to small traders in a bid to create jobs in the jewellery sector mauled by the economic slowdown.
Gems and jewellery sector has lost around 200,000 jobs in the last eight months as global economic recession curtailed demand overseas, according to the Gem & Jewellery Export Promotion Council (GJEPC).
In February India allowed star trading houses with a turnover of 25 billion rupees or more for the past three years to import gold directly.
Till now only 23 banks, four state-run agencies and a few traders, with export turnover of more than 75 billion rupees, were qualified to import gold. India imported 396 tonnes of gold last year.
"This move would increase jobs in gold trade and improve distribution across the country. Earlier, karigars (workers) used to sit idle due to improper supply, at least now that would change," said Vasant Mehta, chairman of GJEPC.
The market in the world's gold biggest consumer has traditionally been driven by a hunger for jewellery. The economic boom in India has in the last few years seen the arrival of a new, moneyed consumer who bought gold only as an investment.
According to the World Gold Council, India's investment demand fell by 12 percent to 190.5 tonnes, while jewllery demand declined by 15 percent to 469.7 tonnes in the calender 2008. Gold prices in India have risen by about 29 percent during the same period.
In a market dependent on imported gold, it was this new set of investors who the banks and big importers catered to, often charging huge premiums during high demand phases.
Source : REUTERS INDIA