India because of owing the cultural and religious importance of gold jewellry, predicted to be the growing market for gold, as the country was the largest consumer of gold in 2012-2013 across the world. International markets had been founded with rising prices of gold, but it did not make any prominent impact on India’s consumers. The country encountered with rising fiscal deficit more than sustainable level of 2.5% to 3% of its GDP, due to a substantial rise in gold imports, and consequently raised to 4.2% in the fiscal year 2012.
In Mumbai, a made-to-order jewellery company, Velvetcase, established in 2013 raised the concern over the policies of gold imports, introduced by the regulators recently. Due to the rising deficit, the country, including other initiatives, increased the import duty during the year from 4% to 10%, which led to rise in the input prices and ultimately to some extent declined the demand of gold in the country. Velvetcase used low karat gold to make jewellery and the management was assured due to reducing the amount of gold used in making jewellery that would not only satisfy the growing consumer needs in India, but also make some contribution in balancing the Current Account Deficit (CAD) of the country by this unique business model.
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