Fluctuations in gold, crude prices hit shipments

Suresh P. Iyengar

Up & down

Export of

cut and polished diamonds down 21.38% to Rs 4,622 crore in Oct.

But gold

jewellery up 30.46% to Rs 2,372 crore.

Mumbai, Nov. 22

Notwithstanding the huge volatility in gold and crude prices, India's exports of gems and jewellery declined sharply by 9.52 per cent to Rs 7,100 crore in October 2006 against Rs 7,847 crore in October 2005 .

Similarly, during the April-October period exports fell by 2 per cent to Rs 42,742 crore against Rs 43,615 crore.

`Uncertain time'

"It has been the most uncertain time as far as gem and jewellery exports are concerned. Gold prices have seen price volatility of around 10 per cent in the last few of months. Fluctuations in crude prices have also taken toll on gold prices," said Mr Sanjay Kothari, Chairman, Gem & Jewellery Export Promotion Council.

Export of cut and polished diamonds has seen the sharpest fall of 21.38 per cent to Rs 4,622 crore (Rs 5,879 crore) in October 2006. During April-October 2006, cut and polished diamonds exports fell to Rs 28,744 crore (Rs 33,129 crore), a decline of 13.24 per cent. The steep decline in diamond exports was due to fall in demand from the US, Hong Kong, Belgium, Israel and Japan.

Awaiting Christmas

"We are waiting for the Christmas season to begin in the US, Hong Kong and other European countries when diamond sales peak up.

We are expecting exports to go up during the months to come," said Mr Kothari.

Exports of gem and jewellery, including rough diamonds, fell around 10 per cent to Rs 7,270 crore (Rs 8,102 crore) in October 2006.

It fell marginally by 2.53 per cent in April-October 2006 to Rs 44,038 crore (Rs 45,182 crore). Reflecting the fall in global gold prices, gold jewellery exports shot up 30.46 per cent to Rs 2,372 crore (Rs 1,818 crore) in October 2006.

During April-October 2006, gold exports went up 36.08 per cent to Rs 12,986 crore (Rs 9,544 crore).

US move

Adding to Indian gem and jewellery exporters woes, the US is planning to do away with the Generalised System of Preferences (GSP) concession extended to India. Jewellery exports to US is worth $1.7 billion.

The GSP scheme, which was formalised in early 70s to help developing countries to tap the US markets, allows exports of goods not competing with the US products at zero tariffs.

If GSP-products entering the US cross a certain threshold value, the zero tariff benefit is withdrawn.

In such cases, the US President has the authority to grand a competitive needs limitations (CNL)-waiver to grant zero-tariff treatment under the GSP scheme.

Indian jewellery's CNL waiver benefit in GSP regime is coming for review on December 31.

Though restricted to US, under these circumstances, it is going to be a tough task for India to revive gem and jewellery exports.

(This article was published in the Business Line print edition dated November 23, 2006)
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