India's increased import duty on gold is expected to prompt more smuggling of the precious metal into the country.
The government this week increased the import duty on gold to 6 per cent from 4 per cent in a move intended to curb the high demand that has been a significant factor in the country's gaping current account deficit.
"If this is imposed strictly it will lead to illegal smuggling of gold," said Chetan Dhakan, the owner of National Jewellery, a gold trader in Dubai's Gold Souq in Deira. "People always find a way to move gold."
India's government also took a series of steps last year to try to reduce gold imports, including an earlier increase in the import duty and banning banks from lending money to customers to buy gold.
"Gold demand has risen as a hedge against inflation," said analysts at Nomura. "Therefore, we think imposing import duty will likely only shift gold imports from official to unofficial channels as it tackles the symptom, not the cause."
Nomura expects the total value of gold imports to fall to US$44 billion (Dh161.61bn) in the financial year starting in April compared with an estimated $48.3bn in the present period.
"Given India's penchant for gold for weddings and other religious ceremonies, a sharp fall in volumes is unlikely, in our view," said Nomura.
Bhargava Vaidya, a gold analyst at BN Vaidya & Associates in Mumbai, said: "In case this duty keeps on rising you may have some imports coming through some illegal channels."
Gold prices hit record highs in India last year as the rupee weakened against the US dollar. The country was the world's largest consumer of gold in 2011, but China is believed to have overtaken it last year.
Imports of gold reached 223.1 tonnes in the third quarter of this year, up 9 per cent from a year earlier, according to the World Gold Council. India accounted for 30 per cent of global consumer demand for gold.
"The impact on India's imports will be limited as a more important factor in determining gold demand is the strength of the rupee and therefore the value of gold in rupee terms," said Jeffrey Rhodes, the chief executive and global head of precious metals at INTL FCStone in Dubai. "A stronger rupee means a lower gold price and increased demand for gold. Dubai has always been an important gold centre for India. It's likely to have some impact, but I'm not certain how much." Mr Vaidya also believes that imports of the precious metal will not be affected significantly.
"Indians will still consume gold. The demand for this particular commodity is almost price inelastic," he said. Others believe it could have a short-term effect.
"Gold has arrived as an investment product in India along with the traditional jewellery demand," said Priti Gupta, the executive director of commodities and currencies at AnandRathi Financial Services. "The hike in duty will add revenue to the exchequer and will bring down the imports only in the medium term, which will help in narrowing the fiscal deficit in the immediate term. The duty has been raised to 6 per cent from 1 per cent in just one year."
Some jewellers also said that they expected an impact. Dheeraj Jain, the co-owner of Surana Gold, a jewellery shop in Mumbai, said that customers were already being put off by the high prices of gold.
"The cost will be passed on to the customer in the end," said Mr Jain. "Higher prices will mean fewer customers."
business@thenational.ae
How to vote
Canadians living in the UAE can register to vote online and be added to the International Register of Electors.
They'll then be sent a special ballot voting kit by mail either to their address, the Consulate General of Canada to the UAE in Dubai or The Embassy of Canada in Abu Dhabi
Registered voters mark the ballot with their choice and must send it back by 6pm Eastern time on October 21 (2am next Friday)
MATCH INFO
CAF Champions League semi-finals first-leg fixtures
Tuesday:
Primeiro Agosto (ANG) v Esperance (TUN) (8pm UAE)
Al Ahly (EGY) v Entente Setif (ALG) (11PM)
Second legs:
October 23
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
Specs
Engine: Electric motor generating 54.2kWh (Cooper SE and Aceman SE), 64.6kW (Countryman All4 SE)
Power: 218hp (Cooper and Aceman), 313hp (Countryman)
Torque: 330Nm (Cooper and Aceman), 494Nm (Countryman)
On sale: Now
Price: From Dh158,000 (Cooper), Dh168,000 (Aceman), Dh190,000 (Countryman)
Dirham Stretcher tips for having a baby in the UAE
Selma Abdelhamid, the group's moderator, offers her guide to guide the cost of having a young family:
• Buy second hand stuff
They grow so fast. Don't get a second hand car seat though, unless you 100 per cent know it's not expired and hasn't been in an accident.
• Get a health card and vaccinate your child for free at government health centres
Ms Ma says she discovered this after spending thousands on vaccinations at private clinics.
• Join mum and baby coffee mornings provided by clinics, babysitting companies or nurseries.
Before joining baby classes ask for a free trial session. This way you will know if it's for you or not. You'll be surprised how great some classes are and how bad others are.
• Once baby is ready for solids, cook at home
Take the food with you in reusable pouches or jars. You'll save a fortune and you'll know exactly what you're feeding your child.
COMPANY PROFILE
Name: Kumulus Water
Started: 2021
Founders: Iheb Triki and Mohamed Ali Abid
Based: Tunisia
Sector: Water technology
Number of staff: 22
Investment raised: $4 million
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%3Cp%3E%3Cstrong%3EDirector%3A%20%3C%2Fstrong%3ELuv%20Ranjan%26nbsp%3B%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3EStars%3A%20%3C%2Fstrong%3ERanbir%20Kapoor%2C%20Shraddha%20Kapoor%2C%20Anubhav%20Singh%20Bassi%20and%20Dimple%20Kapadia%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3ERating%3A%3C%2Fstrong%3E%203%2F5%3C%2Fp%3E%0A
MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
How to get exposure to gold
Although you can buy gold easily on the Dubai markets, the problem with buying physical bars, coins or jewellery is that you then have storage, security and insurance issues.
A far easier option is to invest in a low-cost exchange traded fund (ETF) that invests in the precious metal instead, for example, ETFS Physical Gold (PHAU) and iShares Physical Gold (SGLN) both track physical gold. The VanEck Vectors Gold Miners ETF invests directly in mining companies.
Alternatively, BlackRock Gold & General seeks to achieve long-term capital growth primarily through an actively managed portfolio of gold mining, commodity and precious-metal related shares. Its largest portfolio holdings include gold miners Newcrest Mining, Barrick Gold Corp, Agnico Eagle Mines and the NewMont Goldcorp.
Brave investors could take on the added risk of buying individual gold mining stocks, many of which have performed wonderfully well lately.
London-listed Centamin is up more than 70 per cent in just three months, although in a sign of its volatility, it is down 5 per cent on two years ago. Trans-Siberian Gold, listed on London's alternative investment market (AIM) for small stocks, has seen its share price almost quadruple from 34p to 124p over the same period, but do not assume this kind of runaway growth can continue for long
However, buying individual equities like these is highly risky, as their share prices can crash just as quickly, which isn't what what you want from a supposedly safe haven.
if you go
The flights
The closest international airport to the TMB trail is Geneva (just over an hour’s drive from the French ski town of Chamonix where most people start and end the walk). Direct flights from the UAE to Geneva are available with Etihad and Emirates from about Dh2,790 including taxes.
The trek
The Tour du Mont Blanc takes about 10 to 14 days to complete if walked in its entirety, but by using the services of a tour operator such as Raw Travel, a shorter “highlights” version allows you to complete the best of the route in a week, from Dh6,750 per person. The trails are blocked by snow from about late October to early May. Most people walk in July and August, but be warned that trails are often uncomfortably busy at this time and it can be very hot. The prime months are June and September.
Specs
Engine: 51.5kW electric motor
Range: 400km
Power: 134bhp
Torque: 175Nm
Price: From Dh98,800
Available: Now
THE SPECS
Engine: 1.5-litre
Transmission: 6-speed automatic
Power: 110 horsepower
Torque: 147Nm
Price: From Dh59,700
On sale: now
A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
