Gems and Jewellery Export Promotion Council (GJEPC) data showed that overall G&J exports fell to $38.3 billion (Rs 2.05 lakh crore) in 2012, compared with $46.2 billion in the previous year. The rupee averaged at 53.49 against the dollar in 2012, compared with 46.68 in the previous year.
We believe the decline would be fully set off by the end of March 2013 after which the industry would enter into positive territory, said Vipul Shah, chairman of the GJEPC.
After a dwindling first six months of the current financial year, G&J exports started recovering gradually in October with stockists orders flowing in from the US for Christmas, New Year and Mothers Day celebrations. Since these three occasions constitute around 40 per cent of overall annual jewellery sales in the US, neither Indian exports nor American retailers look to miss the opportunity.
Overall jewellery demand during the Christmas and the New Year seasons remained flat with around five per cent growth witnessed in the US market. But it raised hope for a recovery, with around 15-20 per cent growth expected during the next financial year, said Shah.
While the US alone comprises 11 per cent of Indias overall G&J exports, West Asia constitutes 48 per cent. Hence, Indian exporters are scouting to expand their footprint further in the West Asian market, in addition to exploring new markets like Australia, Romania and former Soviet republics (Commonwealth of Independent States). Japan is another destination which Indian jewellery exporters are scouting for high-end ornaments. Jewellery exporters are also betting big on the growth in the domestic market this year after the government took a number of reform measures to bring the economy back on the growth path.
Gitanjali Gems Ltd, which runs around 130 retail outlets in the US, has reported around 10 per cent growth in sales on the occasions of Christmas and New Year. According to Mehul Choksi, chairman of Gitanjali group: The economic revival will bring consumers back to the stores in larger numbers, and also strengthen demand for what are otherwise considered non-essentials.
On the domestic front, Choksi said: After a challenging 2012, the Indian government, allowing foreign direct investment in multi brand retail, will yield relatively immediate results, and probably be a cornerstone of retail growth in the first half of 2013. Its only later in the year that the impact will take a more concrete shape as companies move from the drawing board to practical action. But full-fledged penetration of the Indian market by foreign retailers will probably begin only in 2014.
Struggling to overcome the sustained fall in export turnover, diamond jewellery manufacturers have urged the government to implement the Benign Assessment Tax Procedure (BATP) with 2.5 per cent ad valorem income tax levy on declared turnover. Currently, the government considers six per cent as net profit on the turnover declared by jewellery exporters on which 30 per cent of corporate tax is levied.
BATP is currently applicable in major global diamond trading centres like Belgium, Israel and Thailand. It is also currently levied in some other forms in China. Hence, why cannot the same be levied in India too, for transparency, he asked.