With gold imports falling by 57 per cent in the first half (H1) of the current financial year 2020-2021 (FY’21), demand for the recycled gold may go up during the festive season. The demand for the recycled gold from the jewellery industry may rise as the availability of raw gold is inadequate in the market. Gold imports have fallen by more than half due to COVID-19, explained market sources.

According to sources, the fall in imports will create scarcity of raw gold for the jewellery industry, which in turn will raise the demand for recycled jewellery to act as feed stock for them. This will result in demand for the recycled (household) gold and will see its prices also going up.

The gold price for 10 gms of 24 carat and 22 carat on Thursday was quoted at Rs 51,00 and Rs 50,100 respectively, which were down by Rs 20 per 10 gms compared to Wednesday, October 21, 2020. The recycled gold, which has purity less than 22 carat, was quoted at Rs 48,330 per 10 gms against previous day’s price of 47,790.

Gold imports, which have a bearing on the current account deficit (CAD), plunged 57 per cent to $6.8 billion (around Rs 50,658 crore) during the first half of this fiscal amid a slump in demand due to the COVID-19 pandemic, data released by the commerce ministry recently said.

Similarly, silver imports during April-September 2020 too dipped 63.4 per cent to $733.57 million (about Rs 5,543 crore), the data showed.

India is the largest importer of gold, which mainly caters to demand of the jewellery industry. In volume terms, the country imports 800-900 tonnes of gold annually.

Gems and jewellery exports declined by about 55 per cent to $8.7 billion in April-September 2020 amid the pandemic.

Just like other sectors where manufacturing has taken a hit as a result of COVID-19 pandemic and the consequent imposition of lock down has impacted the manufacturing in the jewellery sector too.

Mumbai is one of the biggest manufacturing hubs of gold jewellery in India. However, as majority of labours employed by the jewellery manufacturers here are the migrant labourers and they have fled to their native place because of the pandemic, the production has taken a severe hit in Mumbai. In addition to that, continuation of lockdown in certain pockets of Mumbai has also taken its toll on jewellery manufacturing, sources said.

Majority of labourers in the jewellery manufacturing units in and around Mumbai are Bengali speaking workers. More than 50 per cent of artisans have moved to their native place in West Bengal as an after effect of COVID-19. Durga Pooja celebration will take some more time for them to return to Mumbai.

However, the losses of Mumbai market have proved to be a blessing in disguise for another manufacturing centre in the western India. Surat, which is the commercial capital of Gujarat and also the largest textile and diamond centre, has benefitted a lot from the Mumbai lockdown with respect to jewellery manufacturing.

Majority of the Mumbai orders have shifted to Surat and jewellery manufacturing units in the city are working two shifts in a day to complete the orders generated from Mumbai.