High returns lure jewellers to US market

Higher realisation continues to attract Indian jewellery manufacturers to the US market despite the scrapping of the Generalised System of Preferences (GSP) on gold and diamond jewellery exports.

Although the realisation was approximately 10-15 per cent higher in the US compared with other major destinations such as Europe, West Asia and Japan, high volumes made sense to do business there, said an industry expert.

The US government scrapped the benefit of lower duty on Indian jewellery exports under the GSP, effective June 30. Despite the GSP withdrawal, Indian jewellery exports continue to grow.

In August, total jewellery exports in rupee terms perked up by 12.72 per cent or Rs 847.83 crore to Rs 7,512.86 crore compared with Rs 6,665.03 crore in the same month last year. In dollar terms, the exports jumped by 30.99 per cent or $443.27 million to $1,873.53 million compared with $1,430.26 million in the year-ago period.

The growth momentum continued between April and August, with exports recording a 12.52 per cent or Rs 3,552.55 crore rise to Rs 31,932.36 crore (Rs 28,379.81 crore) in rupee terms and 24.29 per cent or $1,515.13 million surge in dollar terms to $7,752.45 million ($6,237.32 million).

The US accounts for about 25 per cent of India's total exports in gold and diamond jewellery.

Tapping one target customer in the US would equalise the volume of roughly 100 customers in the Australian, Arabian and Japanese markets. Besides, investment to tap 100 customers in the aforementioned potential markets would be much higher, say by 20 times, than that in the US, thereby impacting margins immensely, the expert added.

Although the Gem and Jewellery Export Promotion Council (GJEPC), the representative body of more than 1,000 jewellery exporters, fears that new export orders from the US would shrink after December following Christmas and the Valentine's Day.

However, Mumbai-based jewellery exporters disagree with the GJEPC's pessimism. There might be temporary blips that will be overcome soon, they added. On the potential of new markets such as the CIS countries and Japan, they said the volumes were negligible and would take years to grow substantially.

Mumbai-based Fine Jewellery Manufacturing, a Rs 110 crore gold and diamond jewellery manufacturer, has set up its office in New York for easy penetration into the most remunerative market.