NEW DELHI, Oct 8: India’s gem and jewellery exporters are worried that peak seasonal sales in the period from Thanksgiving to Christmas could fall due to the possibility of a slowdown in the United States, their largest market.
Exports during the first half of the financial year grew by more than 25 per cent to $9.4 billion from a year ago, but industry officials fear fewer US consumers will splurge at a key time of the year if they anticipate trouble ahead.
“The US economy does not seem to be improving at all,” said Bakul Mehta, convenor of the Gems and Jewellery Export Promotion Council. “It is going to hit us.” He said growth in the first six months of the 2007-08 fiscal year from April 1 was strong as many exporters pushed out large quantities before July, when a decision to scrap duty-free status for Indian gold jewellery came into effect.
Industry officials said they would get a clearer picture over the next 15-20 days as US firms start stocking up ahead of the holiday season.
The US economy grew at a relatively brisk 3.8 per cent annual rate in the second quarter, but is forecast to slow significantly during the third quarter because of a continuing slowdown in the housing sector.
“We are keeping our fingers crossed about sales during the Christmas season,” said Sanjay Kothari, the promotion council’s president.
In June, the United States terminated some trade benefits for India, Brazil and other developing countries under a programme revamped late last year by Congress.
The change meant a 6.5 per cent duty on gold jewellery exports. The United States accounts for about 40 per cent of India’s total jewellery sales overseas.
Exporters said the impact of the duty change could be partially absorbed by retailers and wholesalers, but weak consumer sentiment was more worrying.
Officials said that consumers will still feel compelled to buy diamond rings for special occasions, but a surge in gold prices could strain wallets as the gem is often set on the yellow metal.
Despite the uncertainty, Kothari said a sales target of $18.5 billion for gems and jewellery in the fiscal year ending March 2008 was likely to be achieved by diversifying to other markets.x—Reuters
