The weakening of the rupee against the dollar is a double-edged weapon for the gold jewellery chains, especially those based in Kerala. On the one hand, the depreciation in the rupee has led to costs of imported gold rising. On the other hand, it has increased the value of the gold jewellery that is exported.
B. Girirajan, President of the All-Kerala Gold and Silver Merchants Association, said that jewellery exporters in the State stand to gain from the fall of the rupee in the short-term. Most jewellery chains run export divisions, he said. Girijrajan, managing partner of the Bhima group, which has two dozen jewellery showrooms across Kerala, Tamil Nadu and Karnataka, told Business Line that the fall in the price of gold worldwide has favoured the jewellery sector.
But the Government move to hike import duty from 6 per cent to 8 per cent (aimed at discouraging imports to stem the foreign exchange drain) was a setback. He urged the government to roll back the duty. He said that Kerala jewellers exported mainly hand-made jewellery, which gained value-addition.
“We export jewellery to all over the world where Indians live,” he said. United Arab Emirates is the largest market for Kerala jewellery. Most jewellery chains have their showrooms in Dubai, he noted. Dubai is lso the largest wholesale market for gold jewellery.
Girirajan said that though Kerala has a large number of jeweller’s shops (the association has over 4000 members), its nation-wide market share was less than 10 per cent. A Kerala buyer’s profile was very different from those of other States. First, Keralites buy jewellery for daily wear, while in many other States jewellery purchase is for investment. Second, the quantum of purchase was low – mainly jewellery of two or three sovereigns. However, jewellery purchase for wedding has always been in large quantum. Third, selling old ornaments to buy new ones is high, to keep in tune with new designs and fashions.
Girirajan said that Kerala consumed around 60 tons a year. He said though the price is low, demand has slackened as the monsoon has set in and the wedding season has come to a close.
Source: Hindu business line
Source: Bullion Bulletin