The beginning of festivals has hardly been encouraging for the jewellery business, as retailers blame the lack of demand on rising gold prices, which is ruling over Rs 30,000 per 10 gm.
"Even as the festival season has begun the demand for jewellery is hardly there. The sudden spurt in prices to over Rs 30,000 is the main deterrent against the demand," Bombay Bullion Association president Prithviraj Kothari told PTI.
The gold prices on MCX February contract on Friday closed at Rs 30,719 per 10 gm, while in the international spot market the yellow metal ruled at USD 1,620.60 an ounce (28.35 gm).
The lack of demand may also affect the gold imports, he said.
"We are seeing slowdown in imports since January this year due to the increase in excise duty and diminishing demand. In August, the imports are likely to be down by about 30-32 per cent compared to the same month last year," he said.
However, the upcoming India International Jewellery Show (IIJS) may stall the further dip in gold imports as jewellers may increase their stocks to participate in the IIJS, he said.
But it all depends on the price, he said, adding that if the price of the precious metal goes up further and the monsoon does not catch up, the imports may decline by up to 50 per cent from August 2011.
About 70 per cent of jewellery sales takes place in the rural markets and good monsoon plays a vital role, he added.
Echoing the view, Vice President of Mumbai Jewellery Association Kumar Jain said there is a spurt in imports as the manufacturing has gone up due to the IIJS.
"Compared to August 2011, it is still lower. The rising prices of gold is the main hindrance to the sales as well as the imports," Jain, who also owns UT Zaveri retail chain said.
However, the jewellers are hopeful of a rise in demand as the festival season peaks, which will be followed by the marriage season, he said.
"Last year, in August the jewellery sales was higher as there was a sudden decline in prices, which was around Rs 29,400 per 10 gm," he added.
Meanwhile, jewellery manufacturer and brand ORO's Director of Marketing Avinash Pahuja said, "It is actually like a lull before the storm, the season will commence very soon and we are hoping sales to shoot through the roof this year."
The last six months business was hampered due to policy issues in the industry, however, now with things being settled, the jewellers are looking at a fantastic season ahead, he said.