Gems, jewellery exports likely to decline in FY07

GJEPC chief blames volatility in gold prices and a change in user peference for luxury goods.

Exports of Indian gems and jewellery are unlikely to grow at rates seen in the earlier few years. This is because of the high volatility in gold prices and the consumer's increased inclination towards luxury items such as perfumes and watches.

"We have been growing every year between 10 and 15 per cent, but this financial year, I do not think we will be able to grow at a similar rate. Even if the exports maintain their earlier levels, we would be satisfied," Sanjay Kothari, newly elected chairman of the Gems & Jewellery Export Promotion Council (GJEPC) said.

A 10-15 per cent volatility in prices of precious metals was a rare phenomenon, he said adding "this is the first time, such fluctuations are seen, and these are not in the interest of the consumer".

"The price volatility has dealt a blow to the jewellery industry and ways to enhance consumption need to be adopted worldwide," he said.

Gems and jewellery needed to be promoted in the way in which luxury items such as perfumes and watches were being promoted across the world, Kothari added.

The Indian gems and jewellery exports account for around $17 billion. The exports, which included rough diamonds, fell 7 per cent in April-August this year to $6,356 million from $6,826 million in the corresponding period last year.

Citing reasons such as gold price and oil price volatility and the option of luxury goods for the slump in gems and jewellery exports, Kothari said, "These factors will continue to play a significant role in affecting the exports of jewellery."

The GJEPC chairman, who, however, sees a good demand during the festive season, added that a final picture could be arrived at thereafter.

The gems and jewellery industry saw a growth of 6.32 per cent with total exports reaching $16,669.11 million in 2005-06 compared with $15,678 million in 2004-05.