Dubai has always been known for its affordable gold and jewellery prices compared to India, and even after the announcement of reducing import duty on gold and silver in India, buying gold in Dubai remains cheaper by about 5-6 percent. Shamlal Ahamed, managing director for international operations at Malabar Gold & Diamonds, mentioned that residents and tourists, including Indian consumers, prefer Dubai for their gold jewellery purchases due to its diverse collection of designs from around the world.
India’s finance minister, Nirmala Sitharaman, announced the reduction in import duty during the Union Budget 2024-25 presentation, but industry experts like Vijay Valecha, chief investment officer at Century Financial, confirmed that it would still be more cost-effective to buy gold and jewellery in Dubai. Valecha explained that even after the cut in import duty, gold prices were cheaper in Dubai by about 15 percent before the announcement. Retailers who purchase gold in the UAE and export it to India will benefit from this reduction as import duties have been a significant part of the cost.
John Paul Alukkas, managing director of Joyalukkas Group, stated that while the reduction in import duty has made it cheaper to buy gold in India, Dubai remains a more attractive option due to its competitive market and tax-free shopping environment. Alukkas highlighted that the price advantage Dubai offers may diminish with the decrease in import duty, but Dubai’s reputation as a global jewellery hub with diverse offerings will continue to attract buyers, especially from India.
Despite the narrowing price gap between India and Dubai, some believe that the reduced import duty might influence purchasing decisions, but it is premature to predict a decline in demand. Alukkas emphasized that Dubai’s competitive prices, quality, unique designs, tax-free shopping, and exclusive collections make it the preferred destination for gold shoppers. He also mentioned that factors other than price drive purchase decisions when it comes to buying gold jewellery, suggesting that Indian tourists will still choose Dubai for their purchases.
The reduction in import duty is also seen as a strategy to combat smuggling of gold and precious metals into India. Import data shows a significant increase in gold and silver imports from the UAE to India, with importers taking advantage of the lower import duty on platinum alloy compared to gold. Ahamed believes that the reduction in import duty will help curb illegal gold imports, promote legally sourced gold, and contribute to greater market growth for organised jewellery retailers in India. This move is expected to create a more transparent and efficient jewellery sector, leading to accelerated growth and a boost to the Indian economy.
