The 'golden' spot of bullion trade.

KOLKATA: Be it jobs, higher studies or quality healthcare, the city has suffered several blows in all aspects and currently fares poorly in almost every axis of what we call the 'development graph'. But when it comes to gold trade, Kolkata continues to rule the roost. While a clampdown on gold import and a slowdown in the economy have sounded the death knell for yellow metal trade in other cities, Kolkata has turned into a hotspot, thanks to a spurt in demand and low prices.

The icing on the cake, moreover, has been a reverse migration of those involved in the gold trade. In last couple of months, for example, a few old 'kaarigars' have come back to Pradip Basak, a jewellery manufacturer near Sinthi, in search of work. These artisans had left the city for a good living and were making good money in Mumbai. But a sharp fall in jobs has pushed them back to the city they started from.

So what has suddenly worked for the 'dying city' when gold trade is concerned? Experts said it's the lower rate in which gold is available in the city that has worked for Kolkata. While gold in Mumbai was being sold at Rs 30,950 per 10 gm in Mumbai on February 20, price for the same amount stood at Rs 30,600 in Kolkata. More significantly, prices in the 'grey market' were even lower in Kolkata at Rs 30,450. Senco Gold executive director Subhankar Sen, "We have seen a drop in prices in Kolkata in last two-three months. Since prices are lower in Kolkata, some of the jewellers from across the country are purchasing the metal from here," he said.

"The price difference is what draws the buyers to the city. Whether it is purchased from smugglers or a bullion dealer, the yellow metal looks the same after melting," said a jeweller on the condition of anonymity.

The "smugglers" the jeweller was referring to is the other lot who are making most the rising gold demand in the state. The restriction on import of gold has pushed up the demand and in return resulted in a spurt in smuggling across borders. From November last year, the customs department has cracked down on at least 54 cases of smuggling. In November and December last year, customs officials busted at least 32 rackets and seized more than 15 kg of gold. In January alone, they have cracked down on 21 modules in the state and seized an equal amount of the yellow metal.

According to customs commissioner (preventive) SK Sinha, gold smuggling has gone up significantly in past couple of months. "Smugglers are bringing gold biscuits across the border in smaller amounts. Of late, Kolkata has gained prominence in gold smuggling. Gold movement from countries like Malayasia and Singapore has become a cause for concern," Sinha said. According to customs officials, many smugglers are taking the land route after vigilance has been stepped up at airports. Moreover, they are bringing gold valued below Rs 20 lakh to avoid arrest in case they get caught.

Import duty on gold charged at 10% and a central government's rule linking import quantities to exports have brought down supply of gold in India. "You cannot stop smuggling unless the huge demand-supply gap is addressed by the government," said Pankaj Parekh, vice-chairman of the Gem & Jewellery Export Promotion Council.

According to industry insiders, for a smuggler there is around 11% profit. This translates into a profit of around Rs 5 lakh per kg. "We have conveyed the gravity of the situation time and again to the finance ministry. We will write to the state government once again regarding the issue," Parekh said.

Despite Bengal's jewellery industry being placed at a comparatively comfortable position vis-a-vis other states, there is a threat looming large. "Hidden unemployment among gold artisans across the industry has reared its head. Jobs have come down significantly in last one year in the city though prices are around 1% less here," said Shyamal Bera, a jewellery manufacturer in Sinthi.

"Such a situation will eventually leave more than 50 lakh artisan from Bengal jobless," said Bachhraj Bamalwa, former chairman of the All India Gems & Jewellery Trade Federation. Bamalwa, who is also the owner of Nemichand Bamalwa & Sons, felt the situation couldn't be reversed unless the government takes a decisive step.

Source : timesofindia.indiatimes.com