Traders in Mumbai’s Zaveri Bazaar stop selling jewellery against credit to retail jewellers

Traders at Mumbai‘s Zaveri Bazaar, reeling under sales depleted by the Covid-19 pandemic and rising gold prices, have stopped selling jewellery against credit to the retail jewellers.

They are insisting that retailers pay upfront for their jewellery taken during the pre-Covid period or return them if they fail to pay.

Retailers have already returned a lot of gold jewellery the manufacturers, who are melting these into bars and selling in the market. They are using this money to reduce the interest cost on bank borrowing. In the process, import of gold is also coming down.

“The overall business has become slow in this pandemic. We are not taking any risk in this scenario. We are not giving any credit facilities to jewellers. We are taking a cautious approach. Some of the manufacturers have asked the retail jewellers to return the gold jewellery they have bought from them,” said Suresh Jain, director of Zaveri Bazaar-based Royal Chains.

“They are melting this jewellery and selling to repay the banks. Since gold prices are high, the loss in making charge is being ignored by the manufacturers. This is also making gold available in the market and reducing country’s gold imports in this critical time,” added Jain.

Taking a cue from the global market, gold prices in the domestic spot market went up Rs 209 per 10 gm on Monday to touch Rs 53,952. Gold rose to an all-time high today pushed higher by a softer dollar and concerns over global economy as coronavirus cases continued to rise.

Surendra Mehta, national secretary, India Bullion & Jewellers Association said “Jewellery manufacturers have utilised the lockdown period in analysing their business model. This introspection has helped them understand that in this unprecedented rising price scenario, they cannot continue their credit line to the retailer. Hence, most of manufacturers have asked the retailers to either pay up immediately or return the goods supplied by them.”

Mehta added that the free food scheme have also helped jewellers as their burden towards the karigar payment has reduced, especially when the business is very low.

“With no exhibition and trade shows, where jewellers used to spend crores of rupees, the marketing cost has also gone down. All these measures have considerably reduced the finance, operation, personnel and marketing cost of the industry,” the IBJA executive added.

Currently jewellers are also not replacing their inventory that is being sold, resulting in lower import, he said.

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