Indian Gem& Jewelry Industry to Maintain Growth
By www.jewellerynetasia.com
After some European countries, it’s now India’s economy which has started adopting a bad shape. India’s growth is under pressure now. The government recently reset its growth rate for the current year to around 7.5% from a previous forecast of 9%. India’s growth has slipped down to 7% in the July-September quarter.
Jewellery demand has been shrinking world-wide and also in India. Demand for gold jewellery in India has dropped by 26 per cent year on year and the demand in China surpassed that of India in the third quarter. According to figures provided by the World Gold Council (WGC) Gold price is up by 13 per cent in US dollar terms this year which has jumped to 34 per cent in terms of rupees. Unfortunately, rupee's collapse which is down by 18 per cent against the US dollar this year has also played a role in taking shine off the gold in India. As a result, domestic jewellery market in India has been in a shabby status this festive and wedding season.
WGC Managing Director (Middle East and India) Ajay Mitra said, "The drop in demand was mainly in urban areas while in semi-urban and rural areas it was good. As 60 per cent of the total business is rural driven, it was good. Although prices of gold have dropped recently so we expect positive sentiments during wedding season in which major jewellery buying takes place."
In spite of economic slowdown in India and other countries of world, the Gem & Jewellery Export Promotion Council (GJEPC) is hopeful to maintain their 15 per cent growth trajectory to touch USD 49.5 billion in the 2011-12 fiscal, thanks to an increase in prices of gold and diamonds.
GJEPC Chairman Mr. Rajiv Jain said, “The first eight months of the year have been good for us and we believe that the growth momentum would be maintained in the remaining months of the current fiscal year."
“The United Arab Emirates (UAE) is the main market for India's gems and jewellery exports, where the country exports 43 per cent of overseas shipments, followed by Hong Kong (30 per cent) and the US (17 per cent). Exporters are trying to tap new markets in countries situated in Latin America and Africa, besides Russia,” Mr. Jain said.
On the other hand, India's polished diamond exports in November fell by 27 percent year on year to $1.182 billion and polished imports downed by 20 percent to $803.49 million, as per provisional data provided by the GJEPC. The country's net polished exports, representing the excess of exports over imports, declined by 38 percent to $378.73 million.
Rough diamond imports increased by 49 percent to $1.169 billion during the month, while rough exports jumped by 167 percent to $146.29 million. India's net rough imports rose by 40 percent to $1.023 billion.
India's net diamond account for January through November registered a deficit of $4.937 billion, compared with a deficit of $1.105 billion one year ago.
Talking again about the India government’s initiatives to curb the inflation, it cannot extend the same stimulus which it had given during 2008 slowdown. The limited government finances and high inflation have left little room for high doses of fiscal and monetary stimulus that supported consumer demand and shielded the economy three years ago. The government will have to remain prepared for an economic slowdown longer than the one in 2008, analysts here say.
Mr. Anubhuti Sahay, economist at Standard Chartered Bank in Mumbai, says, “This time the country is staring at a big fiscal slippage because of higher subsidies and revenue losses. Any stimulus by the government would surely put too much strain on the country’s fiscal health.”
So overall health of the Indian economy may not be good but as far as growth of gem & jewellery sector is concerned, India is still hopeful to maintain it in the current fiscal year.
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