Gold jewellery exports likely to dip by 50 per cent in FY14: experts

Gold jewellery exports may decline by about 50 per cent in this financial year from last year after government restrictions reduced the availability of raw material, according to industry experts.

Gold jewellery exports were at Rs 1,293 crore in fiscal year 2012-13 (FY13), according to the Gems and Jewellery Export Promotion Council.

"There are less stocks available in the market and the premium is as high as 8-10 per cent in the domestic market. This will give rise to smuggling. Very little gold is available for exports," Gitanjali Gems chairman and managing director Mehul Choksi said on Wednesday.

"Exports have declined by 55 per cent since the last seven months. We are expecting an overall about 50 per cent decline in gold jewellery exports this financial year," Mr Choksi told reporters on the sidelines of the Mumbai Jewellery and Gems Fair 2013, which was organised by UBM India and FICCI.

He said if raw material availability remains low, it will give rise to smuggling.

During the festive season, the industry's sales fell about 50 per cent compared to a year ago.

"There is a need for conducive government policies for the sector to perform well. If the gems and jewellery sector grows to its full potential, it can easily employ another 1 million people," he added.

The sector currently employs about 2.5 million people.

Mr Choksi also said Indian demand for gold jewellery was shifting to the Middle East due to competitive prices.

"Middle East countries are taking advantage of the India situation as Indians are going to those countries to buy gold jewellery," he added.

Local gold prices are high, even as prices overseas drop. In Dubai, gold is 21 per cent cheaper than in India, making the city an attractive destination to buy the metal, Gitanjali Export Corporation chief executive Sanjeev Agarwal said.

"There are reports that about half tonne of gold is coming into India from Dubai. The Middle Eastern region, along with China and Thailand, are also emerging as alternative manufacturing bases. Many big players have already shifted their bases to these locations to feed the export market," he said.

NRIs are also buying from outside India, All India Gems and Jewellery Trade Federation (GJF) chairman Haresh Soni said.

"The domestic market is affected by the lower availability of stocks. Even NRI demand is getting diverted to other countries like the neighbouring countries and Dubai."