Is the price of gold in India lower than in the UAE?
UAE jewellers dismiss all talk of surging US dollar making India gold price cheaper
Dubai: Is buying gold turning out to be cheaper in India than it is in the UAE?
“No way!” say gold traders and retailers in the UAE. And they are quite emphatic about it.
“Sure, India cut gold import duty from 15% to 6% this year, but that’s only narrowed the price gap of gold prices between India and Dubai,” said Anil Dhanak, Managing Director of Kanz Jewels. “Even now, the price difference in favour of buying in UAE is enough to offer significant savings for customers purchasing jewellery in Dubai.
“When factoring in the tax-free benefits available to tourists, the savings become even more attractive.” (For latest updates on gold and FX, click here.)
It’s always been an accepted fact that buying gold or jewellery in the UAE comes with significant gains for tourists from India. More so, during the time when import duties on gold were raised to 15% as India sought to shackle domestic demand for the asset. (India, the second biggest consumer of gold after China, imports much of its bullion needs, with the UAE being a significant supplier under the CEPA deal.)
Even now, the price difference in favour of buying in UAE is enough to offer significant savings for customers purchasing jewellery in Dubai.
False claims
Doubts about the price advantage between buying gold in UAE vs. India came after prominent Indian media platforms this week raised the topic. What they had to say was that Indian gold prices are now favourably placed compared to what buying in the UAE, Qatar or Oman would require.
"Since yesterday, there have been a few Indian shoppers, residents and tourists, who have come to our stores and remarked about the Indian media reports," said a jeweller. "All such reports of a gold price advantage in India are patently false - and the UAE gold trade must do something about it."
What's worse is that there is not even a single factual element in the reports talking up the India gold price advantage.
Strong dollar the cause?
The basis of this argument was that a stronger dollar – and a weakening rupee - would translate into a lower retail price for gold in India compared what the same would cost in UAE or Qatar.
The current level for one UAE dirham is 22.98 Indian rupees. The UAE has the dollar peg at Dh3.67.
This week’s Indian media reports – and on some of most established media platforms - comes at a time when visitors from India to the UAE are building towards an end-December surge. It’s a near certainty that the vast majority of these visitors would be heading for the Gold Souq at the first opportunity.
“The current rate for 22K gold jewellery in India - including all tax elements such as import duty and GST - is around Dh316 per gram, while in the UAE, it stands at Dh308 a gram (including 5% import duty),” said Shamlal Ahmed, Managing Director of International Operations at Malabar Gold & Diamonds. “Despite the recent import duty reduction in India, buying gold remains cheaper in the UAE.
“In addition to the price difference, the UAE offers a diverse collection of jewellery designs from around the world.”
Even with gold prices in a resurgent mode over renewed worries about the Russia-Ukraine situation. After Donald Trump’s win in the first week of November, gold had crashed by over $200 from near all-time high of $2,790 an ounce.
Despite the recent import duty reduction in India, buying gold remains cheaper in the UAE.
Today, gold’s trending at $2,640, already higher by $31 in the last 24 hours.
This is unlikely to impact Indian tourists’ demand for gold. But the media reports in India did create doubts for some of the shoppers.
More tourists are also using India’s UPI (Unified Payments Interface) option, where they can make purchases in the UAE using the rupee in their Indian bank accounts. Jewellery retailers in the UAE say this has now become a favoured option for a growing number of Indian visitors.
Malicious intent
"There seems to be malicious intent in suggesting that gold prices are higher in UAE, Oman or Qatar are higher vis-a-vis in India," said a gold trader in Dubai. "Unfortunately, some doubts have been created among our shoppers from India. We will address all their concerns immediately."