How is Kerala’s ‘City of Gold’ coping with the price shock? Not too well
Of the 34,600 tonnes of gold that’s with Indian households, Kerala holds around 2,000 tonnes. Kerala’s gold trade is estimated to be worth around Rs 1 lakh crore annually.
Gold retail outlets line the road in Koduvally, Kozhikode. (Photo: Shaju Philip) IN THE main market in Koduvally, a municipal town in north Kerala’s Kozhikode that stretches along NH-766, the glass door of every shop slides open into the same world: gold necklaces, bangles, diamonds, chains and rings in velvet trays, all shimmering beneath chandeliers.
With 80 gold retail showrooms, 100-odd wholesale dealers and goldsmiths, this is Kerala’s gold hub, with among the highest concentration of shops selling the yellow metal.
Of the 34,600 tonnes of gold that’s with Indian households, Kerala holds around 2,000 tonnes. Kerala’s gold trade is estimated to be worth around Rs 1 lakh crore annually.
Koduvally’s ‘City of Gold’ status, built on a nine-decade-long tradition of selling gold, makes it sensitive to every ripple in the bullion business, anywhere in the world. Days after the government hiked the import duty on gold to 15%, shopkeepers in Koduvally say their footfall has fallen.
Yet, the glass doors keep sliding open. Like Jameela, a homemaker, who has walked into one of the stores. “Our lives can’t be separated from gold. I don’t think people will stop purchasing gold even if prices are up. There are many occasions in life when buying even a gram of gold becomes a matter of pride. But unfortunately, I will have to buy less today. I plan to buy anklets of two sovereigns (16 gm) for my daughter; a year ago, I could have bought 4-5 sovereigns with that money,’’ says Jameela, whose husband is a retired school teacher.
What's this gold worth?
of this gold can wipe out the country's external debt of $765 billion
Shop owners say the volatility in gold prices has hit their business. “It’s almost impossible to announce the day’s price. By the time people reach the shop, the rates are different. Most people now buy less than 15-10 sovereigns. A year ago, they would buy 50 sovereigns,” says Finu Muhammed of Majnas Jewellers.
Besides the retail shops, there are around 100 wholesale gold merchants who operate in Koduvally, supplying gold to various parts of Kerala and outside.
A Rafeeque of A R Gold, a wholesale vendor of gold, says, “The price rise has affected us too. Business was anyway bad. Unlike the older generation, younger women want simpler ornaments.’’
K Surendran, who owns Archana Jewellers, fears the hike in import duty will push the trade underground. “When the import duty was brought down to 5% in 2024, smuggling had come down significantly as the profit margin was very less. With 15% import duty, smuggling will turn lucrative. Besides, now it has become profitable to buy gold ornaments from UAE through legal routes. Many UAE jewellers have already started to woo Keralites.”
Why do governments hold gold?
Surendran is among Koduvally’s second generation of gold businessmen. His father Erachan started the showroom in 1930, one of the earliest in Koduvally. Surendran’s son Sanoop Lal runs the business now. “Koduvally showrooms offer gold ornaments with the lowest labour charges. That has been our hallmark. It is the trust built over years that keeps our business going. The number of showrooms in Koduvally is now stagnant,’’ he says.
The sight of the town’s goldsmiths seated in front of charcoal-fired flames, melting and reshaping gold, has slowly faded. In their place are gold workshops where drum polishing, cutting and sandpaper works are carried out.
Here, too, there are reasons to worry. “The shrinking volume of business in retail shops has affected us too. If ornaments do not move in large quantities, our work suffers too. Our future was anyway bleak. Youngsters don’t want to do this job. Now, most of the goldsmiths are from West Bengal and Rajasthan. Initially, they join as workers in Koduvally and later start their own workshops,’’ says Velayudhan, a traditional goldsmith who now runs a gold workshop.
Share
