Jewellery exports are likely to be hit and decline by up to 20 percent in FY14, due to limited availability of gold inventory in the domestic market following the government's steps to curb demand, according to export promotion body GJEPC.
Mumbai: Jewellery exports are likely to be hit and decline by up to 20 percent in FY14, due to limited availability of gold inventory in the domestic market following the government's steps to curb demand, according to export promotion body GJEPC.
"It is difficult to get stocks for manufacturing jewellery and if the current situation prevails, it is going to hurt the exports by 15-20 percent this year," Gems and Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah said.
Even as the US market is picking up, the rise in input costs as well as the interest rates will make it difficult for exporters to ship their products at competitive rates, he said adding this may result in hitting their margins.
To discuss this situation, GJEPC is meeting the Commerce Ministry officials on Monday, he said.
India exported USD 39 billion worth various precious gems and jewellery in the 2012-13 fiscal, according to GJEPC data.
Meanwhile, the All India Gems & Jewellery Trade Federation (GJF) has taken steps to help curb gold imports by issuing a circular to its members to stop selling bars and coins.
"We have requested our members and affiliated members to help the government to reduce gold import by not selling bars and coins. We have got positive response from our members and the result of this will be seen in the July imports," GJF former Chairman Bacchraj Bamalwa said.
About 150 tonnes gold is used for coins and bars by jewellers, he said.
In July, the imports is likely to decline by 30-40 percent compared to July, 2012, when the imports stood at around 60 tonnes, he said.
Bamalwa said if the government does not take any steps and the current situation continues, it will have a heavy impact on the industry.
"It is very difficult to restock as it is difficult to get gold in the market. The premium has also gone up to USD 20 in the open market from USD 1," he said.
GJF, he said, has asked the banks to sell the coins and bars available with them to the jewellers, to ease the situation.
"The coins and bars, which are lying with the banks, can be made available to the jewellers to ease the current situation," he added.
GJF had a round table discussion with banks, RBI officials and the World Gold Council last week.
"We will present the outcome of the meeting to the Finance Ministry on the issue and hope they will take some positive steps on this soon," he said.
The the government and the Reserve Bank have been taking steps to curb the gold imports, which have averaged 152 tonnes in April and May, resulting in foreign exchange outgo of about USD 15 billion.
The average monthly gold import was 70 tonnes in the last fiscal. Last night the import duty on gold was increased to 8 percent from 6 percent, the second increase within six months.