Gems, jewellery exports defy trend, zoom 22%

At a time when the Indian exporting community is feeling the heat of rupee appreciation, gems and jewellery exports have risen 21.5 per cent in value terms to $9.38 billion in the first six months of the current financial year (H1FY08), as against $8.01 billion in the corresponding period last year.

The Reserve Bank of India (RBI), in an analysis on the country's foreign trade, said, "Even though exports overall are struggling due to rupee appreciation, gems and jewellery exports, which recorded a poor 2.7 per cent growth in FY07, are witnessing a turnaround."

According to RBI, the rise in the sector's exports is fuelled by a strong demand from all quarters, especially Hong Kong and the US. It further said the supply-demand imbalance was primarily responsible for sudden spurt in gold prices all over.

The rupee appreciation of more than 10 per cent in FY08, according to analysts, has also increased the competitiveness of gems and jewellery sector by making imports of raw materials like gold and uncut gems cheaper.

The World Gold Council (WGC) has pointed out that total gold supply in the second quarter this year stood (Q2FY08) at 840 tonnes, whereas the demand was 944 tonnes.

"Global demand for gold jewellery showed the strongest surge, reaching $14.5 billion in Q2FY08, a 37 per cent increase over Q2FY07," added WGC.

International gold prices began to pick up from 2001 and this year, especially, has witnessed a sharp rise. Gold prices crossed the $700 an ounce-mark on October 19. Domestic prices have also followed the international trend.