BY MUBASHRA SIDDIQUI

Despite the major festivals of the Indian-subcontinent being celebrated so close together, gold sales across the city remained slow. 

Traditionally, Indian women often flock to buy at least a modest piece of jewelry during Eid, Diwali and the upcoming Christmas. This year, however, jewelers saw a substantial reduction in their customer base, which many say was almost halved. With Eid and the major occasion of Diwali already having passed by, they don’t have much hope for December sales either.

According to Sikander Chandrani, owner of Meena Jewelers based in Decatur, there are two main reasons for this downward slump that has left major retailers like him worried: the current sag in the economy and the recent imposition of a 5.5 per cent duty on almost all gold pieces imported from India. 

“Initially, duty was imposed on some gold pieces in July 2007 but since this year, almost all gold imported from India has a 5.5 per cent duty. And while gold prices have quadrupled in the past few years, the 5.5 per cent import duty has remained unchanged... This means that from around 44 cents per gram, today the import duty charge is roughly $ 1.6 per gram today. This is huge for a value-added industry,” Chandrani explained, adding that most gold retailers just don’t have that kind of a profit margin. 

Naturally then, the charge of this import duty, or at least a part of it, is passed on to the customer thereby further increasing the price of gold jewellery.

The current economic slump, however, also cannot be ignored. Says Parag Shah, manager at Legacy Jewels, “Gold jewellery is not a necessity but rather a luxury item. With people having to budget for other things, they are rethinking their spending on gold. Asians - Indians in particular - do have disposable income for gold, but rather than say, for example, spending $100 that they had prior budgeted for gold, they would now spend $50.”

Dharmesh Bhura, an owner of Veeraj Jewelers, also acknowledged the significant impact of the downturn in the economy. Elaborated Bhura, that while Atlanta remains the major hub for gold purchase in the South-Eastern region for Asian immigrants with customers driving in from Tennessee, Alabama, North Carolina, etc. the recent hikes in gas prices further deterred customers from buying gold. With gas prices having hit highs of $4 per gallon, the average customer is hesitant to uptake the cost of travel to spend about the same amount on gold itself, Bhura said.

Shameem K., a potential gold customer in Alabama, agreed with Bhura’s assessment saying that the gas prices did make her rethink her decision to invest in gold, “I had set aside a budget for some gold purchase for the festive season but decided it would not be worth the hassle to travel all the way especially with how the gas prices have been.”

Additionally, say the jewelers, since the gold market is so volatile at the moment, many customers are rethinking their decision to buy gold until prices fall or somewhat stabilize. Indeed, many are adopting a ‘wait-and-watch’ attitude. Those considering travel back home are far more in favor of purchasing gold where they can at least avoid the import duty charge.

For Haritha Manda, a home-maker, this is very much the scenario. She explains, “Normally, during Diwali or Dussehra, we usually buy some gold - mostly as coins. This year, however, I haven’t bought any. Since I know I shall be traveling to India next month, I shall consider buying gold back home.”

Currently, the Atlanta Indian Jewelers Association plans to lobby against the 5.5 per cent import duty and to make India a part of the Generalized System of Preferences (GSP) again thereby making them exempt from it. Bhura, who is the chairperson and treasurer of the association, said that they would start their petition process before the end of the year.

Chandrani explained the significance of such immediate action, “Usually, an import duty is charged on foreign goods to give the local market an edge. But here in the US, there is virtually zero production of 22 or 24 carat gold jewellery that is favored by Indians. So there is hardly a need for such an high import duty.” 

For the time being, however, like many of their customers, the jewelers too have taken on a cautious and watchful approach. “It is very difficult at this point to predict what’s going to happen. Once we have a new president, new economic policies in place, let’s see. For now, it’s all just a game,” said Shah.

And one unvarying factor in this game, to the jewelers, is that whatever the cost all the jewellery must be imported from India. While other manufacturing nations such as Oman are exempt from the import duty, jewelers in Atlanta would not consider turning to them. “The Indian karigari (skill-work) remains unmatched,” they all unanimously conclude.