Jewellers across India are in no mood to listen to finance minister Chidambaram's request to suspend manufacture and sale of gold coins in the country. After suspending the sale of gold coins for nearly four months since July, jewellers have decided to offer gold coins of smaller denominations because the government is yet to replace the 20:80 policy on gold imports that has made supply of gold through banks and nominated agencies difficult in the country but has given a fillip to the entry of gold through illegal routes.

Talking to ET, Haresh Soni, chairman, All India Gem & Jewellery Trade Federation (GJF), said, "Gifting gold coins on any auspicious occasion is part of our tradition. Despite this, we had requested our members to suspend sales and manufacture of gold coins to cooperate with the government to address the issue of current account deficit. However, we advised them to sell coins as jewellers had made an appeal to us during Dhanteras and Diwali." Jewellers are now selling smaller denominations of coins such as 2 gm, 3 gm and 5 gm.

"Though they are selling smaller denomination of coins, we have requested them not to give special focus to bullion sales as there is a need to increase sales of jewellery which needs value-addition," Soni added. Investment demand for gold in the July-September quarter came down to 43.5 tonne from 83 tonne in the same quarter of the previous year. In the first nine months of 2013, however, investment demand for gold was higher at 263.5 tonne when compared with the same period in the previous year. Huge investments happened during April and May when gold touched a low of Rs 25,500 per 10 gm. Bachhraj Bamalwa, past president of GJF and director Nemichand Bamalwa & Sons, said

"We are still selling gold coins but demand has dropped drastically. The extreme volatility in Indian gold due to rupee devaluation and a high premium on account of non-availability in the market has made bullion less attractive among consumers ." Bamalwa said the 20:80 principle has given a fillip to the entry of smuggled gold in the country.

"This parallel economy will damage and ruin the basic fabric of this industry ," he said. Soni added strict import measures were yet to be eased out.

"Bonded warehouses in Ahmedabad are still empty. Availability still remains an issue," the GJF chairman said. According to the 20:80 principle , if a nominated bank imports 100 kg of gold, then 20 kg needs to be held in a bonded warehouse. The bank can import further only when it releases 15 kg (75% of 20 kg) for exports. The scheme is primarily aimed at promoting exports. While the 20% of imports is linked to exports, the rest 80% will take care of domestic usage. "We have requested the FM to allow the standby letters of credit scheme for import of gold on loan basis," Soni said.

Gold bears return

NEW YORK: Investors got less bullish on gold as hedge funds doubled their short holdings just before prices erased a weekly loss and Janet Yellen pledged to press on with economic stimulus if confirmed as Federal Reserve chairman. The net-long position in gold slumped 37% to 55,456 futures and options in the week ended November 12, data show, the biggest drop since February. Short bets climbed to 54,143, the highest since mid-August , from 26,490 a week earlier.

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Keywords:Jewellers,finance minister ,Chidambaram, gold coins , gold imports, All India Gem , Jewellery Trade Federation,GJF, Diwali,rupee,smuggled gold , economy , bank imports , Investors,Business news