Indian visitors and NRIs prefer to buy gold and jewellery in Dubai as prices are cheaper by up to 15 per cent in comparison with their home country, which is mainly due to high tax and custom duty.
Gold and jewellery retailers in Dubai say that sales have reached pre-pandemic levels. Buying by Indians will pick up in the coming weeks on the eve of Diwali, which will be celebrated in October.
“Gold prices in the UAE are kept lowest always when you compare it with the Indian market, the difference is 12 to 15 per cent due to the high customs duty in India. Tourists to UAE can avail of value-added tax (VAT) refund facility in cash up to Dh35,000, which is another attraction,” says Abdul Salam KP, vice-chairman of Malabar Gold and Diamonds.
John Paul Alukkas, managing director of Joyalukkas International Operations, said buying gold is still considerably cheaper in Dubai compared to India.
“Jewellery in India is costlier on account of goods and services tax (GST) and import duty etc.,” said Alukkas.
Starting June 30, 2022, India hiked import duty on gold from 10.75 per cent to 15 per cent, making foreign markets such as Dubai more attractive for NRIs and Indian tourists to buy gold and jewellery.
Vinay Jethwani, a partner, Meena Jewellers, said jewellery buyers in India have to pay import duty as well as GST. “Hence gold is cheaper in Dubai compared to India. Moreover, Dubai being the city of gold is the ideal place to buy gold due to the wide range of designs and attractive making charges.”
Sales at pre-pandemic level
Jethwani added that the past few weeks have been very good for the jewellery trade. “A steady price drop has led to enhanced sales. The gold jewellery purchases have almost reached the pre-pandemic levels.”
Gold witnessed a weekly decrease of more than three per cent to a 2-year low, under the pressure of a stronger dollar. Gold dropped to its lowest levels since Covid-19, driving the price below a key support level of $1,700.
Alukkas said the gold jewellery purchases have been seeing a steady increase as there has been a drop in gold prices over the past few weeks which has resulted in higher footfalls in stores.
Abdul Salam added that the Jewellery market is showing a positive trend from the beginning of the year, and have reached the pre-pandemic level in the UAE. “The flow of tourists to Dubai and overall positivity in the economic factors in the region helped to reactivate the market.”
Diwali sale Begins
Abdul Salam added that this year being the first Diwali after the pandemic, the market is expected to be very positive.
Alukkas noted that gold jewellery sales pick up during the Diwali season, primarily because Indians are one of the major gold buyers in this region. “It is a customary habit to buy gold during this time. People buy gold for their personal use as well as to give as gifts. We expect a substantial increase in sales during the upcoming Diwali as celebrations were low key last year on account of the pandemic,” he said.
Jethwani added that Diwali is one of our most important periods as far as jewellery sales are concerned.
“We have regular customers who save money throughout the year in order to buy their preferred jewellery during Diwali. Since our customer base is predominantly South Asians, it goes without saying that gold jewellery sales pick up during the Diwali season. While a majority of the customers buy gold for their own use, some buy it for gifting purposes. People are going to have a full-fledged Diwali celebration after a two-year gap. Hence the increase in sales will be substantial,” added Jethwani.