A scarcity of gold and high prices are pushing Indians to look to silver or diamond jewellery as alternative gifts this festive season, adding to the gloom in the gold trade after government measures to restrict imports.
Indians are the biggest buyers of gold in the world and many believe that buying and giving it on holy days brings good fortune. Friday marks Dhanteras, a huge festival associated with Lakshmi, the goddess of wealth, and another festival, Diwali, falls on Sunday.
"So far, we have sold just two gold rings today. It's a far cry from what it was during Dhanteras last year," said executive Sanjay Kumar at Chawla Jewellers in New Delhi. Saleswomen in bright traditional sarees sat idle.
Outside the shop, a big banner trumpets a 1,000 rupee discount on gold market prices and a discount of up to 50 percent on diamond jewellery.
"People are suffering from cost inflation, they don't have liquid cash. We expect sales of about 25,000 rupees today, about half of what we made last Dhanteras," said TM Bhandari, selling jewellery at Mohan Silver Shoppe in New Delhi.
Last year over this festival period around 60 to 70 tonnes of gold was sold, roughly the amount imported in an average month, according to Bachhraj Bamalwa, a director at the All India Gems and Jewellery Trade Federation.
This year, supplies in the domestic market have virtually dried up because of restrictions on gold imports imposed by the government to reduce the trade deficit and support the currency. Import duty on the precious metal is at a record high of 10 percent.
Gold is selling for around 30,700 rupees per 10 grams, about $120-130 an ounce over London prices. That's encouraging some recycling, which helps supplies, but buyers that can wait are simply deferring their purchases.
SEARCHING FOR SALES
Given high inflation and low real interest rates, many Indians see gold as an investment. If demand is being displaced anywhere this year, it is to silver and diamonds, which hold their value in the same way.
Imports of silver - which costs just 500 rupees per 10 grams - are likely to hit a record this year after reaching 4,073 tonnes from January to August, more than double the 1,921 tonnes in the whole of 2012.
Jewellers are pulling out all the stops to boost sales at this festival time and television channels are awash with sparkling commercials.
One slot from jeweller Tanishq has taken Twitter by storm, breaking new ground by starring a woman embarking on a second marriage, an event that doesn't normally attract as much glitz as first weddings in deeply conservative India.
Gitanjali Gems, one of the largest branded jewellery retailers in the world, is pushing sales by cutting prices of diamond jewellery to as low as 4,900 rupees.
Along with many other chains, it is also competing for business by offering vacations, handbags and other prizes to customers who buy gold.
"Diamond jewellery sales may grow by 10-15 percent," said Chairman Mehul Choksi. But without gold, this year's festival season just won't be the same for housewife Sadhna Goel. "I bought just two silver coins worth 565 rupee each," said Goel, shopping in Karol Bagh, New Delhi's gold hub.
"We used to buy gold coins or gold rings but this is the first time in many years that we have been forced to stick to buying silver, steel utensils and such."
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