According to John Paul Alukkas, managing director of Joyalukkas International Operations, buying gold in Dubai is still much less expensive than purchasing it in India.
A male passenger can carry a maximum of 20 gms, which doesn’t cost more than Rs. 50,000, and a female passenger can have a maximum of 40 gms which should not cost more than Rs. 1 lakh as a duty-free allowance.
In Dubai, prices are lower by up to 15% due to high taxes and customs duties compared to India. Since gold purchased from Dubai is tax-free, you will have to pay for the gold itself. Especially compared to other nations, the purity of gold purchased from Dubai is greater.
Dubai's gold market is also better managed, organized, and regulated. As a result, buying gold in Dubai is significantly safer than in other nations.
Retailers of gold and jewelry in Dubai claim that sales have returned to pre-pandemic levels. On the eve of Diwali, which will be observed in October, purchasing by Indians would increase in the upcoming weeks, they add.
“Gold prices in the UAE are always kept lowest. Especially when you compare it with the Indian market, the difference is 12 to 15 percent 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.
“Jewellery in India is costlier on account of goods and services tax (GST) and import duty etc.,” said Alukkas.
NRIs and Indian tourists may find it more appealing to purchase gold and jewelry in overseas markets like Dubai after India increased the import duty on gold from 10.75 percent to 15 percent on June 30, 2022.
Dubai's gold rate is based on international gold values, guaranteeing consistency in pricing throughout the city's retail establishments. The fact that gold prices fluctuate internationally, much like stock market prices do, gives gold buyers in Dubai the chance to benefit from declining costs and get gold at the lowest price.
A partner of Meena Jewellers, Vinay Jethwani, stated that Indian jewelry consumers must pay GST and import duty. “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.”
Business before pandemic
Jethwani added that the past few weeks have been very good for the jewelry trade. “A steady price drop has led to enhanced sales. The gold jewellery purchases have almost reached the pre-pandemic levels.”
Under the weight of a stronger dollar, gold experienced a weekly decline of more than 3% to a 2-year low. The price of gold fell to its lowest level since COVID-19, falling below a crucial support level of $1,700.
Alukkas claimed that since gold prices have fallen over the past several weeks, more people have been visiting stores, which has led to a steady increase in purchases of gold jewelry.
Abdul Salam stated that the UAE's jewelry industry has reached the pre-pandemic level and has displayed a favorable trend since the beginning of the year. “The flow of tourists to Dubai and overall positivity in the economic factors in the region helped to reactivate the market.”
Increase in business sales during the festivity
The market is anticipated to perform exceptionally well this year because it is the first Diwali following the pandemic, according to Abdul Salam.
Alukkas added that the Diwali season saw an increase in sales of gold jewelry, partly because Indians are one of the region's most significant gold consumers. “It is a daily 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 because of the pandemic,” he said.
Diwali is one of our most significant times of the year for jewelry sales, according to Jethwani.
The government regulates all goods sold by jewelers, ensuring the legitimacy of every piece of gold sold in Dubai. Additionally, all jewelry shops in the city are required to display a gold purity hallmark on the things they sell and to give it to customers upon request. The gold purity hallmark is a document that lists information like the karats, weight, and cost of labor, as well as the amount of genuine gold and gemstones used in the jewelry. It guarantees that every purchase is verified and has a global market value. Because many people bring gold back to their native country, buying gold in Dubai is quite well-liked among ex-pats.
Another factor contributing to the affordability of gold in Dubai is the possibility to bargain for the cost of the making fees, which are fees associated with creating the ornament—making prices change based on the sort of gold jewellery purchased, and the store one chooses. While bargaining can be a little tricky in the larger jewelry stores in the mall, one won't experience this problem in the stores in the Dubai Gold Souk. One can significantly reduce the making costs by adjusting your purchase amount and the gold price in Dubai.
“We have regular customers who save yearly money to buy their preferred jewelry during Diwali. Since our customer base is predominantly South Asians, it goes without saying that gold jewelry sales pick up during the Diwali season. While most customers buy gold for their 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.
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