The entry of new players into the jewellery market in the Kerala, which has the biggest jewellery retailers in the country, has raked up a controversy with the new players allegedly using religious identity and symbols to increase their market share. The All Kerala Gold and Silver Merchants Association (AKGSMA), a body of around 12,000 traders in Kerala, said the trend of openly using religion to sell products would set a bad precedent in a State like Kerala.
“These players source investment from the members of a particular religion who do not believe in claiming interest for their investment in commercial banks, and return their investment with a certain percentage of the guaranteed dividend earned from the business,” said S. Abdul Nassar, State treasurer of the AKGSMA. Further, they use religious identities in their shops for which they get considerable patronage from a section of religious scholars from this community,” said Mr. Nasser.
‘Business affected’
This has started to upset the business of thousands of jewellery shops, both retail and wholesale, in Kerala. These new players do not collect manufacturing charge for the ornaments sold through their outlets. In Kerala, some jewellery shops had earlier tried zero manufacturing charge, but all got their fingers burnt, added Mr. Nasser.
Speaking to The Hindu, Mohammed Manzoor, managing director of the private jewellery group which recently launched around 28 outlets in Kerala, said, “We use religious identities, for instance the name of our shop, as we firmly believe in Rabb. We used to charge advance payment from our wholesale dealers at least three months before the sale, which is the main working capital for us. Making use of the margin from this investment, we sell the jewellery without charging any manufacturing cost. Other allegations are baseless,” he said, while claiming that his group has become the segment leader in Kerala in just four years.
Huge annual sale
According to the Commissionerate, GST department, Kerala, the annual sale of jewellery in Kerala is estimated at ₹1,01,668.95 crore as per the GST returns submitted by the traders, while the State GST department has received an SGST share of ₹343.81 crore in 2021-22. The size of the unaccounted sale is two-fold higher than the accounted sale in the jewellery market. It is estimated that around 250-300 tonnes of gold jewellery is legally sold in Kerala, while the size of the unaccounted market in Kerala is considered two-fold.
Also, over 12,000 small, medium, and big jewellery traders are engaged in the sale of the jewellery market in Kerala where attaining a market share of 20% will make them a segment leader, according to experts.
