Dubai: Over the recent past, the Indian Government — and its policies — have been offering a welcome bonanza for the UAE’s gold and jewellery trade. It, however, remains to be seen whether the new regime, once the elections are over, will be just as favourable.

India raised bullion import duties to 10 per cent to dampen domestic demand and enacted tougher requirements on its traders by insisting that up to 20 per cent of their offtake should be destined for export markets. To an extent they did succeed, as domestic demand did come down and India was pushed to second place by China as the biggest consuming market for the metal last year.

But what this did was raise demand for gold and jewellery among expatriate Indians and visitors from India to the UAE. “The UAE’s gold trade has become the de facto bene-ficiary of the Indian government’s tough stance on domestic consumption — the difference between buying here and in India has gone past 16 per cent on a per gram basis,” said an industry source. (This is from the 10 per cent import duty plus the 6 per cent from the extra premium that India’s domestic bullion trade has to pay to source the metal. In addition, there is the value added tax that the states in India impose on jewellery purchases.)

Already, domestic gold jewellery retailers — and they include some of the biggest names in the business here as well — have called for a rollback of the 80:20 requirement. Some of the submissions before the authorities even demand a cut in the 10 per cent import duty.

According to industry sources, some in the incumbent government are favourable to the industry’s pleas, but once the announcement of the election dates, any decision on this count was for a new regime to make.

“Depending on who wins the elections, we may see a change in the policies,” said Joy Alukkas, chairman of Joy Alukkas Group. “The existing rules were meant to reduce imports into India. For a businessman who is active in the gold industry, I would like the new government to do whatever possible to reduce the duty.

“It would also be good if they can remove the import restrictions. I feel the change in policy decisions will depend to a large extent on who is forming the government.”said Alukkas.