Fears of a US-led military strike against Iraq will further increase India’s jewellery exports this year as gold becomes a safe haven for investment, trade officials said on Monday
”This year the sales have been very good and the threat of US strikes… will further boost sales,” said Sanjay Kothari, chairman of Gems and Jewellery Export Promotion Council.
The council has estimated India’s gems and jewellery exports will reach $8,2-billion in the year to March 2003, up nearly nine percent from $7,53-billion in the previous year.
”We have given a very conservative estimate, the overall sales during the year are likely to be more than that,” a member of the council said.
Traders said they expect exports to grow by 12 to 15%in the financial year to March 2003.
Spot Gold touched $320 a troy ounce last week on prospects of US military strikes against Iraq and concerns over the outlook for the world economy.
Spot gold traded at 316,50/7,00 at 0950 gmt on Monday under pressure from stronger dollar and more stable equity markets but prevailing political tensions will keep prices from falling too far, analysts said in London.
FAITH IN GOLD
India, the world’s largest producer of cut and polished gems, has already seen its gems and jewellery exports jump 25,4% in the April-August period compared with last year.
Gems and jewellery exports in the first five months of the current financial year increased to $3,36-billion compared with $2,68-billion during the year-ago period.
Traders said jewellery exports are usually high until the Christmas and taper off in the last quarter of the financial year.
The US demand has been very high in the past two months as that government cut duty on jewellery imports, traders said.
”US buying has been unusually high in July and August and we expect some slow down in the current month and then a pick up before Christmas,” said Vijay Kapoor of P.M.Dwarkadass Jewellers.
Indian jewellery sales, which account for around 17% of total exports by value, suffered a major setback after September 11 terror attacks on the United States last year.
”Stock markets are down. I think right now gold is the best investment possibility,” Bombay-based jewellery exporter Trimurti Zaveri said.
Nearly 40% of the country’s exports of precious metals and ornaments go to the United States, followed by Hong Kong with 23% and Belgium with 12%.
India, which employs nearly three million people in the precious metals and jewellery industry, accounts for about 55% of the global polished diamond market and some nine percent of the jewellery market in value terms.
Traders and industry officials said there was a shift in demand in the United States towards gold jewellery from ornaments studded with precious and semi-precious stones.
”Gems do not have the same resale value as gold that is why people even in the developed countries are demanding gold jewellery ever since they have burnt their fingers in the stock markets,” Kapoor said. – Reuters