Jewellery exports rise 25% in April-May

Lack of improvement in fundamentals and uncertainty over global economic growth expected to pull down numbers

After five years of subdued demand abroad, India’s export of gems and jewellery have begun rising again, going by the first two months of the current financial year.

In April and May, these rose 25.6 per cent in dollar terms ($5,789 million) and 32.4 per cent in rupee terms (Rs 38,607 crore).

Barring gold jewellery shipments from the domestic tariff area (DTA; outside Special Economic Zones and similar other concessional areas such as EOUs, etc), almost all segments of the trade saw growth in these first two months. Non–availability of gold continued to hit gold jewellery export from the DTA.

Experts attribute the rise to inventory building by traders, wholesalers and retailers abroad. “Pipeline inventory of ornaments dried up due to 42 days of manufacturing halt during the strike in March and April. Stockists and retailers used their inventory for sales and, hence, they needed to re-build their inventory for sale in the coming seasons. So, gems and jewellery exports from India zoomed in April-May,” said Praveen Shankar Pandya, chairman, Gems and Jewellery Export Promotion Council.

The spurt in jewellery export was a relief for the government; the segment is 13 per cent of India’s merchandise export.

The big pull was from America, 38 per cent of global luxury demand, with jewellers’ preparations for the annual exhibition in Las Vegas, the world’s largest such event. In a rush to put on display the latest designs, both retailers and stockists booked huge quantities of ornaments ahead of this exhibition, which concluded early this month. Jewellery demand from other regions, however, remained subdued, with the global economic uncertainty.

“Our own business performance indicates a sharp fall in jewellery export in June and thereafter. Stockists have already built their inventory to the full. The global economic environment still lacks a direction, due to uncertainty in Europe (with the British referendum and its aftermath) and the US presidential election is scheduled for later this year in the US.

The US Federal Reserve has deferred an interest rate hike for perhaps September over turbulent signals about its economic growth and employment generation in the country. All put together would have an impact on jewellery demand this year,” said Vipul Shah, managing director, Asian Star Co, a 100 per cent jewellery exporter here.