Home Middle EastUAE What motivates shoppers to purchase gold and jewelry in Dubai and then sell them in other countries?

What motivates shoppers to purchase gold and jewelry in Dubai and then sell them in other countries?

Residents and visitors carrying valuables exceeding Dh60,000 in cash, gold, jewelry, or diamonds are obligated to declare them while traveling.

by Jamsheera
Shoppers buy gold from Dubai

Shoppers are increasingly purchasing gold and precious metal jewelry in Dubai and then selling these valuables in other countries, particularly South Asian ones.

Industry executives attribute this trend to the trust consumers have in the quality of gold and jewelry available in Dubai, coupled with the price disparities that buyers can capitalize on.

Furthermore, in some countries, taxes are imposed on purchases of gold and jewelry above a specific threshold, whereas there is no tax on buying gold jewelry in Dubai. If travelers exceed the allowed limit for carrying gold and jewelry, authorities may confiscate the items or require passengers to pay customs duties, depending on the policies of each country.

For example, a male Indian passenger who has resided abroad for over a year is permitted to carry jewelry valued at Rs50,000 (equivalent to Dh2,213), while a female passenger can carry jewelry worth Rs100,000 (equivalent to Dh4,425).

Residents and visitors in the UAE carrying over Dh60,000 worth of cash, gold, jewelry, diamonds, and other valuables are obligated to declare it when traveling into or out of the country.

“We’ve observed customers purchasing gold jewelry in Dubai and reselling it in other countries, particularly India. However, this practice is primarily driven by differences in gold prices rather than disparities in quality,” stated Shamlal Ahamed, Managing Director of International Operations at Malabar Gold and Diamonds. “Gold prices in Asian countries like India are approximately 12-15% higher than those in Dubai, resulting in significant profits for consumers engaging in such cross-border buying and selling.”

On Wednesday, the 24K variant of gold was trading at Dh246.5 (equivalent to Rs5,570) per gram in Dubai. In comparison, the 24K variant was trading at Rs6,323 per gram (equivalent to Dh280) in India.

Last month, India increased the import duty on gold and silver findings used in jewelry making, as well as on precious metal coins, from 11% to 15%, aligning them with the duties on gold and silver bars.

In a recent notification, India’s Ministry of Finance also raised the import duty on spent catalysts containing precious metals from 10.1% to 14.35%.

Residents and visitors from South Asian countries constitute one of the largest buyer demographics of gold jewelry in Dubai.

“Tawhid Abdullah, chairman of Dubai Jewellery Group, highlighted that jewelry in Dubai is renowned for its highest quality standards and competitive pricing. Dubai jewelers prioritize business volume, resulting in fixed making charges per gram, which are typically lower compared to markets like India, where making charges are calculated as a percentage of the gold price. Unlike in other places, fluctuations in the gold rate do not impact the making charge of jewelry in Dubai,” explained Tawhid Abdullah.

He further noted that the recent customs duty hike in India has raised the price of jewelry in the country. “Tourists in Dubai can benefit from VAT refunds at airports, providing an additional advantage. In comparison to most regions worldwide, Dubai remains the most cost-effective destination for purchasing various kinds of jewelry.”

John Paul Alukkas, managing director of Joyalukkas Group, emphasized that the stringent quality standards and authenticity of the Dubai gold market are key attractions for global buyers.

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