Gems and jewellery shine for exporters

The gems and jewellery exports in the first half of the financial year increased by 27 per cent to touch $9.4 billion from $7.4 billion in the corresponding period last year, according to the Gems and Jewellery Export Promotion Council (GJEPC) data.

The growth came at a time when exporters had been complaining about reduced margins and weak export performance due to the strengthening rupee.

"A significant factor contributing to the present export growth is the slashing of import duty on diamonds to zero in this year's Budget," said GJEPC chairman Sanjay Kothari, adding, "The growth in diamond exports was 28 per cent, in jewellery it was 21 per cent and in coloured gemstones, it was 22 per cent."

According to analysts, gems and jewellery traders are now importing back jewellery and diamonds which were not being sold and were lying with international retailers and wholesalers.

"Earlier, an exporter would not think of importing back the exported jewellery, even if it was not getting sold. Now, with import duty being bought down to zero, exporters are importing diamonds and jewellery, and re-exporting them, after refurbishing them," said a GJEPC functionary.

Exporters maintain that gems and jewellery is just one sector that is seeing healthy growth during the current financial year.

"The import content in the sector is very high and, hence, the rupee appreciation may not be affecting it much. But exports in sectors like textile have been 5 per cent, while in handicrafts they are only 2 per cent, as the import intensity is very low. With the rupee remaining at current level, total merchandise exports from India will not be more than $140 billion, as against the target of $160 billion for the financial year," said Ganesh Kumar Gupta, chairman of the Federation of Export Promotion Council (FIEO).

FIEO maintains that appreciating rupee has affected the export performance of the sector.

"Our import intensity is 70 per cent. We are losing out on the rest of the value of exports due to rupee appreciation," said Kothari.

The council has kept an export target of $18.5 billion for the year 2007-08, an increase of around 8 per cent over the figure recorded in 2006-07.

"This is a conservative target which has been set after keeping in mind an appreciating rupee as well the weak demand in the international market," added Kothari.