Jewellery sector sees growth ahead

Jewellery sector sees growth ahead (updated - 22 Aug 2010)
August glittered for India’s gems and jewellery sector, with demand from domestic as well as foreign markets rising sharply ahead of the festival season. Indications of revival in the global economy ensured robust jewellery demand in the US market. Experts believe the trend will continue for the rest of the financial year, on stable gold prices and positive global economic indicators.

“Demand from the Americas have rebounded, with the 40 per cent growth we have witnessed in jewellery sales there,” said Mehul Choksi, chairman of Gitanjali Gems, which runs a chain of 130 retail shops in the world’s largest jewellery consuming market, contributing 13 per cent of the company’s turnover.

Since the US alone constitutes nearly 40 per cent of global retail jewellery sales, the rebound in the country’s overall sales is good news for us, Choksi added.

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In the first quarter of the current financial year, a majority of jewellery companies reported robust growth in their sales and net profit.

The resilience of the jewellery industry, one of the country’s leading foreign exchange earners, was seen over the last year, when it continued with plans of penetrating newer markets. As a consequence, India is undeniably the US’ largest supplier of jewellery, with that country importing 25 per cent of its gold and diamond jewellery from here. India’s diamond share in the world market also witnessed an increase in this period in value terms, increasing from 60 per cent to 70 per cent, said Vasant Mehta, chairman of the apex trade body, Gems & Jewellery Export Promotion Council (GJEPC).

According to GJEPC, India’s cut and polished diamond exports reported 74 per cent rise in rupee terms to Rs 27,149.7 crore during the first quarter of the current financial year. In dollar terms, the growth was even higher, at 85.4 per cent, to $5,946.6 million. Every 9 out of 11 diamonds worldwide are processed in India.

India imports rough diamonds and gold bars from abroad to process in local units. Total import of rough diamonds showed a 54.3 per cent growth in rupee terms at Rs 14,265.9 crore, while the same in dollar terms rose sharply by 63.1 per cent to $3,102 million. Imports of gold bars, however, declined 36 per cent in rupee terms to Rs 5,206.8 crore and 31.8 per cent in dollar terms to $1,136.6 million in the quarter ended June. Analyst attribute this to a dramatic increase in scrap gold availability from local sources, as consumers booked profit on every price spurt.

“Jewellery sales started recovering since April and continued until now. But demand, especially from the US, Europe and Asian countries grew faster than expected on stabilisation of gold prices and beginning of buying seasons,” said Vishal Doshi, Group Executive Director of Shrenuj & Company Ltd.

In India, post-monsoon seasonal demand begins with the onset of the festival season, which is starting with Raksha Bandhan on August 24, followed by the Ganapati festival on September 11 and continues until May next year.

European and Asian markets, including India, China, Hong Kong and Vietnam, have also emerged as major contributors to growth in jewellery sales. Retailers and stockists have booked raw material to full capacity in anticipation of high orders during the ongoing India International Jewellery Show, a five-day global exhibition currently being held in Mumbai. Last year, Indian jewellers contracted around Rs 3,000 crore worth of jewellery supplies during the exhibition and this is estimated to rise to around Rs 4,000 crore this year.