Jewellery exports to US likely to fall

With the US government withdrawing the generalised system of preferences (GSP) on June 30, Indian jewellery manufacturers and exporters are expecting a decline in exports to the country.

To improve exports, the exporters have started modifying products to avoid the rise in prices. The diamond caratage has been brought down marginally. Gold weight has also been compromised, wherever necessary, to maintain the prices at the same level.

Though the problem has been sorted out between Indian manufacturers and the US importers, consumers are still staying away from fresh buying.

"How can you expect consumers to spend in jewellery, when they are facing more basic problems such as housing and interest rates," said an exporter, who forecast the realisation to come down at least by 1 per cent.

The domestic gems and jewellery industry had estimated an exports growth of 2-3 per cent this year, which seems unlikely on account of the GSP withdrawal and the appreciation of rupee.

Anticipating a sluggish US market, exporters have shifted their focus on new markets such as Japan, Russian and the West Asia.

"With the unsold inventory of the Christmas season piling up, it will be a big challenge for us to clear it in the next couple of month," said the exporter. He anticipated sales to the US might decline by up to 5 per cent next year.

Meanwhile, gems and jewellery exports during the first eight months (April-November) of the current financial year increased 14.70 per cent in the rupee term to Rs 37,104.03 crore compared with Rs 32,348.84 crore in the same period last year.

In the dollar terms, the exports recorded a growth of 28.52 per cent to $9,123.19 million from $7,098.71 million last year. In caratage term, however, the total exports rose by 16.17 per cent to 280.86 lakh carats from 241.77 lakh carats.

Instituted in 1976, the GSP was aimed at promoting economic prosperity of designated under-developed countries.

Under the programme, more than 4,650 products from 144 countries were given a preferential entry into the US. Since then, the programme has been extended periodically. India was one of the beneficiaries of the GSP programme.