India's gem and jewellery export industry is beginning to see some signs of a pick-up in purchases in the US, ahead of the crucial Christmas season. But volume sales would continue to be sluggish, a senior industry official said.
“We are seeing a seven per cent improvement in early sales for the Christmas season in America. But volume sales will remain low,” said Mr Sanjay Kothari, Vice-Chairman, Gem and Jewellery Export Promotion Council, on Tuesday.
The pickup in sales is possibly due to the affinity to gold and jewellery as confidence in currency is weak, he told Business Line. The slight improvement that is seen in sales is in value terms and not in volume terms.
“As prices of gold and diamonds have risen considerably in the last one year we are seeing an increase in value terms,” Mr Kothari said. The US is the leading export market for India's gem and jewellery industry. About 50 per cent of goods are exported to this country.
In value sales the industry will be able to surpass exports of last financial year (March 2010-April 2011), but volumes of goods sold would be lower. The industry has been growing at 20-25 per cent in the last few years. This growth rate would be maintained mainly helped by rise in gold and diamond prices.
DIAMOND EXPORTS
During 2010-11, India exported diamonds and gold jewellery worth Rs 58,668 crore, up by 28 per cent on year. “Trading of diamonds and gold jewellery is going on well but manufacturing is in a slump,” Mr Kothari said.
Gold prices have been on an upward movement touching record highs several times during this year. Gold has moved up by 27 per cent from a year ago in the international market. Rough diamond prices have also moved up 20-30 per cent in the last one year, while polished diamonds have gained 10-15 per cent during the same period, Mr Kothari said.
The industry is now waiting to see the Christmas season in the US , the bridal season in India and the Chinese New Year pan out to make an assessment if there has been an improvement in sales. Chinese New Year falls in the last week of January in 2012.
Jewellery demand has been quite strong in China. During the third quarter of 2011, global demand for gold rose by 6 per cent to 1,054 tonnes, mainly because of jewellery demand in China apart from investment demand in Europe, the World Gold Council recently said.
The rupee's sharp depreciation against the dollar only provides a marginal relief as the gem and jewellery industry imports rough diamonds which are later exported after being cut and polished. About 80 per cent of diamonds are imported as roughs, Mr Kothari said.