Duty Cut: 'No Gain To Consumer’

Ahmedabad: Edible oil companies, which have started reducing prices to between Rs 2-6 a kg recently following import duty reduction announced by the Government last week, feel that the ordinary consumer can benefit only when duty is reduced on soya oil as well.

On March 20, the import duty on crude palm oil, including crude palmolein, was slashed from 45 to 20 per cent and that on refined palm oil, including RBD palmolein, from 52.5 to 27.5 per cent by the Centre. While welcoming the import duty reduction on these oils to improve supplies, oilseed crushers and manufacturers in Gujarat maintain that the actual beneficiaries of the Government move were hoteliers, bakeries and the vanaspati industry which use huge quantities of palm oil and they are unlikely to pass on the price reduction to the consumer.

The common consumer — in many parts of central and western India — uses soya oil for household cooking, which has seen no price reduction. Vijay Gupta, Chairman and Managing Director, Gujarat Ambuja Exports Ltd (GAEL), an oil-maker, told Business Line on Tuesday that the prices of all edible oils could go down further by Rs 3-4 per kg if the Government reduced duty on soya oil as well to 20 per cent.

Unless all edible oils are provided a level-playing field, the prices of this essential commodity can hardly benefit the actual consumer.

Repercussions

An official of Adani Wilmar Ltd, makers of Fortune brand edible oils, said reduced prices of palm oil have pushed some consumers towards it; ironically, the price of palm oil in Gujarat has gone up by Rs 3 per kg during the last two days.

As a result of import duty cut, Gokul Refoils reduced the palm oil prices by Rs 4 a kg, while KS Oil announced a price cut of Rs 2 a kg on mustard oil.

Similarly, cottonseed oil, used mainly for frying purposes, has seen prices go down by Rs 3 a kg.

Gold Jewellery No More Indian Bride's Best Friend

Ahmedabad: When textile designer Anshu Murarka married earlier this month, her wedding trousseau had a laptop, a plasma television and mutual fund units besides seven gold coins, dainty gold chains, pendants and bracelets. Run-up to Budget 2008-09

Twenty seven years ago, says Anshu's mother Ramila, she had 500 grams of gold in the form of necklaces, ear rings, bangles and hair braids in her wedding dowry.

The unchallenged place of gold jewellery in Hindu weddings made India the world's largest consumer of the metal.

But soaring prices resulted in upstart gadgets replacing gold jewellery in the wedding dowry.

"If my daughter had to wear all gold (jewellery) at her wedding, I would have had to spend an additional Rs 2, 00,000 which was out of the question for now," Ramila Murarka said.

"About 20-30 years ago, a middle-class wedding trousseau had an average of 100 gram of gold. Now it has fallen to 70-80 gram," said Ajay Mitra, managing director-India of the industry-funded World Gold Council (WGC).

"Televisions, cars and cell phones have crept into a woman's marriage."

Gold prices have risen by 25 per cent on year curbing demand at a time when weddings are scheduled, and traditionally a boomtime for the trade.

On Monday, a bank quoted prices at Rs 12,421 per 10 gram, up from Rs 12,377 on Friday. The April gold contract on the Multi Commodity Exchange of India touched its highest level on Monday at Rs 12,186.

In January, when the season started, imports of gold totaled just 24 tonnes, down 72 per cent on the year, according to the figures of the WGC.

Fashions change, designs remain

While jewellery is losing appeal, it is not as if gold itself has lost any shine.

Rising incomes have ensured that the base of gold buyers is getting bigger, an analyst said. WGC figures show India's gold imports rose 7 per cent in 2007 to 773.6 tonnes.

Nineteen-year old bride, Vindhya Tiwari, also in Ahmedabad, said she did not want her parents to feel the financial burden of buying gold for her.

"So it is simple for me -- mix gold jewellery with fake (gold) jewellery," Tiwari said referring to her attire on her wedding day last week when she wore her mother's gold jewellery with newly acquired non-gold ones.

It's just that patterns of spending and new priorities have to be made room for.

Ritu Datta, an air-hostess also based in Ahmedabad, said she chose to buy a car with the money meant for her trousseau.

"I find it senseless to buy expensive gold ornaments and keep it in safe vaults when I can buy a car and use it everyday," Datta said.

These signs of more purchasing power help to sell more gold.

"With the reach of television increasing and the heavy promotions, gold has created a position in the minds of people," said Nayan Pansare, a gold market expert working for jewellery exporting companies.

"Many luxuries have become a necessity so brides may be buying less gold, but overall gold consumption may continue to increase due to Indians' fascination for the metal and more people being able to afford it now."