India's would-be PM 'beacon of hope for the gold industry'
India's new Prime Ministerial candidate Narendra Modi could well be the knight in shining armor for the country's gold, silver and diamond retailers.
Posted: Monday , 16 Sep 2013
MUMBAI (Mineweb) -
An unlikely saviour appears to have arrived on the horizon for the country's beleaguered gold industry, battered by import duty restrictions.
India goes to the polls in 2014. With the main opposition party, the Bharatiya Janata Party (BJP) announcing Gujarat chief minister Narendra Modi’s name as the party’s prime ministerial candidate, jewellers from across the country, diamond retailers and bullion traders are all lining up to pledge their support Modi.
Though India has recorded three decades of reasonable growth under the Congress led government, the question doing the rounds is whether the model has run out of steam.
A faction of economists who support social welfare programmes, which is a calling card of the ruling Congress Party, have openly criticised Narendra Modi. A controversial leader and political figure, it was during his tenure that at least 2,000 Muslims were killed during the unrest in Gujarat in 2002.
Whether he is capable of taking up the country’s top job next year, is the moot question.
"Narendra Modi has been anointed the principal opposition party BJP’s prime ministerial candidate for the 2014 Lok Sabha elections," said Saileshbhai Kavadia, a bullion retailer. "Modi has been the Chief Minister of Gujarat for several years and has done wonders for the diamond industry there. His sole efforts have ensured that the state of Gujarat has become the hub of the global diamond trade."
And Surat is just one city in Gujarat. On a per day basis, Surat alone deals in $73 million worth of diamonds. The turnover of Surat’s diamond industry is about $14 billion annually and it accounts for over 9 percent of Indian exports, to the overseas markets of the US, Hong Kong and the United Arab Emirates.
India has become the world’s headquarter for rough diamonds, overtaking Antwerp in Belgium, which had traditionally always been the unofficial headquarters to the global diamond industry. The country is also the hub of the diamond cutting and polishing industry, accounting for 9 out of 11 diamonds produced globally. As Jayeshbhai Danadia, bullion retailer added, "India has replaced Israel as a diamond trade hub based on just on city's contribution. With Modi as the PM candidate, the bullion industry is looking forward to some sane measures to promote the jewellery sector, unlike the strangulating policies of the Congress government."
Leaders of the ruling Congress Party have received flak from the bullion community: for the rupee’s fall to a record low earlier in the month; for the many gold import curbs instituted by the Congress led Prime Minister Manmohan Singh's government; and for the bleak foreign investor outlook and for the exodus of foreign business.
An office bearer of the Bombay Bullion Association said many jewellers and retailers are upset with the Congress for the arbitary ban on gold imports, which has practically "killed the business for small time gold shop owners."
M Mehta of the Association said that the jewellers community was bearing the brunt of the government's illogical policies. "With almost no gold imported in August, how are jewellers supposed to keep new designs ready for the upcoming festival season, when throngs of customers will flood our stores? We have been banned from selling gold coins too, which would have taken care of some of the customers demand,'' he said. In what could be construed to be outright backing, Arvind Mehta of the Association added that Modi could change the face of India if elected to power, and had become "a beacon of hope for the gold industry", which has been reeling from the many confusing import and export norms.
India's main opposition party, the BJP, is looking to swing the polls by winning 272-plus seats in the 2014 elections.
Not to be outdone and continuing his barrage of criticism against the government and Prime Minister Manmohan Singh, Narendra Modi has alleged that the ruling Congress Party can turn gold into sand. This particular statement has been taken up by the bullion community as open support for their cause.
Other opposition parties too have come out openly criticising the Congress government. "The government should be thrown out from the Centre at any cost in the coming elections." said opposition MDMK leader Vaiko, who said the Congress party should not be re-elected.
Stating that the ruling government has failed to work for the interests of the people, Vaiko said, "The Indian currency is losing value and so does the Congress. The Indian economy is going down the path of Zimbabwe, where the currency value has plummeted to the bottom."
iPad Version: Picture - A customer tries gold bangles inside a jewellery showroom at Noida: REUTERS/Parivartan Sharma