Prices of rough diamonds, a major raw material accounting for about 65 per cent of the finished jewellery cost, are likely to go up by 10 per cent as retail jewellery sales rise, boosted by a soaring demand from consumers, especially in India and China.
“The price is expected to continue its upward march till September as the seasonal demand for the upcoming Diwali, Christmas and New Year will continue till then. After that, the price will see a correction as it will have already peaked,” said Sanjay Kothari, the chairman of the Gems and Jewellery Export Promotion Council.
He was addressing a press conference in Mumbai on Tuesday, giving out details of the upcoming India International Jewellery Show 2008, which will be organised in the city between August 7 and 11.
Prices of rough diamonds have increased by 15 to 20 per cent in the last six months, adding to the worries of diamond jewellery manufacturers, who are reeling under volatile gold prices, a global economic slowdown and dwindling demand. Experts are of the opinion that the demand of jewellery will continue to grow, especially in developing countries like India and China, where disposable income among the average middle class is increasing.
Since the economic slowdown continues to loom large over the US, the major market for Indian jewellery sales, making up more than 70 per cent of the global exports, local jewellery manufacturers are eyeing Indian, Chinese and West Asian markets for future growth.
“The world is looking at India, China and West Asia because of their growing economies. We are also focusing on these markets,” said Kothari.
More From This Section
Domestic jewellery manufacturers are targeting youngsters with innovative designs to boost sales. However, Vishal Doshi, group executive director, Shrenuj & Company, one of India’s largest jewellery manufacturers and exporters, said prices were unlikely to increase further as diamond mining company De Beers had already raised rates by 6 per cent for its siteholders last month.
“Prices are unlikely to increase at least till September,” Doshi said. Normally, siteholders do not raise prices so frequently, fearing a shift of customers to other siteholders or retail sellers.
The country’s rough diamond imports surged 24.88 per cent in rupee terms and 27.60 per cent in dollar terms at Rs 13,172 crore ($3.19 billion) in the first quarter of 2008-’09 compared with Rs 10,548.23 crore ($2.5 billion) in the corresponding period last year. In volume terms, imports grew to 443.332 lakh carats from 420.5795 carats during the period under review.
India’s gem and jewellery exports recorded an average 30 per cent growth in the last few years. Last year (2007-’08), the country’s gem and jewellery exports recorded a growth of 16 per cent in rupee terms to Rs 84,058.19 crore and 30.19 per cent in dollar terms to $20.8 billion. But a global economic slowdown may ease the momentum of growth this year.