Jalgaon Gold Market Losing Its Lustre?

[This report is part of a series by NewsClick on multiple issues across the state in the run-up to the state Assembly elections.]

Almost half the day had passed when Ajay Lalwani came to the counter of his jewellery shop in Jalgaon's Subhash Market. His cashier informed him that nobody had turned up at the shop till then. "See, it is 12 pm and we do not have even a bohani (first sale of the day). This is the routine nowadays. Gold market is no longer a buzzing place," he said.

Lalwani is also the president of Jalgaon City Jewellers Association. His shop, Mahavir Jewellers, is one of the biggest showrooms of the city. Jalgaon has been known for its gold trade, traditionally. People across central India—from Indore, Nagpur, Beed or parts of Gujarat—come to Jalgaon for shopping of gold, silver and diamond ornaments.

"Our biggest problem right now is the hiked custom duty. Jewellers across India were requesting the central government to reduce it to 8%. But instead of that, government raised it from 10% to 12.5%. It is not just harming our business completely, but at the same time, it is creating space for black market as well as ill businesses like drugs in India," claimed Lalwani.

When asked how this could help drug smugglers, he explained: "It is proved time and again that the popular product of smuggling easily becomes the currency for drug lords. Gold is easily movable across many border states of country and so, the black market of gold will ultimately hurt India’s economy."

Another issue that the gold traders are dealing with is recession.

In India, gold has been a key backup for common people in the days of financial uncertainties. As India has slipped into the recession, people would have turned to gold as a security investment. But due to increased custom duty and depreciation of the rupee on the international level, gold prices have soared to an all-time high. Price of one tola (10 gram) of gold had reached Rs 38,000 in the first week of September, which is making it difficult for the people to buy gold.

"Gold is the last resort people turn to. However, at this point, when the market is down, people are just looking after their daily needs. This too has slowed down our business," said a forth-generation jeweller from Jalgaon on the condition of anonymity. He told NewsClick that he had had to face trouble before for speaking on this issue to a newspaper, and was harassed by a few supporters of the government on social media.

"My son is studying in the school. I will ask him to study hard and find a good job. This business is going down and there is no sign of its revival," he said.

"We, as small-time jewellers, have very limited influence on the market. During such days of recession, people rarely buy gold and secondly, if they buy, they go to the big jewellers. Here, we suffer a lot because we have a very limited holding capacity. Personally, for the past four months, I am struggling to pay even my EMIs. I have to clear salaries of four workers in the shop. This is a very difficult time," he added.

Many jewellers from Jalgaon told NewsClick that even though demonetisation didn’t target their trade specifically, it crushed the buying capacity of the customers.

"Agriculture is the backbone of the Indian economy. Demonetisation hurt it badly along with many other small businesses. That ultimately damaged our business too," said Manohar Patil, manager of another giant jeweller: RC Bafna and Company.

Patil, however, is hopeful of the revival of the economy in the upcoming festive season [Diwali]. "This year, rains have been good. We hope that good crop will revive the entire upward chain of economy," he said.

Gold trade industry is also struggling with the commodity forward trading. "We are strongly against it. This is fluctuating gold rates like anything and so, during such volatile days, industry is facing a lots of problems. We are requesting the government to keep gold out of this trading so that actual industry will have its say in the entire process of gold buying. I hope government would listen to us," said Lalwani.

The slowdown in the market has its own negative impact on the employment in the businesses. Though no jeweller from this market has laid off employees so far, the ornaments makers are returning to their native places due to lack of work. Lalwani told NewsClick, "Mainly, workers from Bengal are experts in ornament making. There were around 7,000 such karagirs [carving artists]. But now, in the last four months, thousands have gone back to their villages."

According to him, the business is down by almost 40% in the jewellery industry. "If this situation continues, then only big players will remain in the market in the next three to four years. All small jewellers will be wiped out. This industry gives employment to about five crore people in India. Central government will have to listen their problems if it really wants the country be a prosperous nation," said a jeweller while speaking to NewsClick.