Jobs on the line as India's gold sector suffers under government curbs

Thu Oct 31, 2013 5:05pm EDT
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By Siddesh Mayenkar and A. Ananthalakshmi

MUMBAI/SINGAPORE (Reuters) - Squeezed by government rules meant to curb a surge in gold imports, India's bullion industry is shrinking, with banks and others opting to redeploy personnel for now but possibly facing big job cuts in coming months.

Refiners, jewelry manufacturers and retailers say they could start cutting jobs after Diwali, one of India's biggest festivals, in the first week of November as festive demand will have sucked supply dry. Some have already begun to do so.

Gold on the local market is now fetching a record premium of $130 an ounce to the global bullion price and that is expected to climb even higher because of coming festivals.

Bullion banks, who profited from huge volumes of gold imports until May, have begun shifting people from their gold desks to other teams.

"There is no gold coming in so how do we carry on? Consolidation is happening at the moment in the industry," said the head of one of India's biggest jewelry chains, speaking on condition of anonymity.

He said he had cut "tens of jobs" at his firm.

Gold is the second-biggest item on India's import bill after oil and, facing a record trade deficit and a plunging currency this year, the government imposed stringent rules with the aim of curbing demand for the metal.

These have slowed imports to a trickle: a mere 7 tonnes arrived in September versus a record high of 162 tonnes in May.   Continued...

A shopkeeper waits for customers at his gold and silver jewellery shop in the old quarters of Delhi October 7, 2013. REUTERS/Mansi Thapliyal