Falling rupee hits gem and jewellery trade

MUMBAI: India's gem and jewellery merchants may have to wait for some more time to realize their profits out of exports as rough imports have become costlier by 14% in the last three months due to rupee depreciation.

The depreciating rupee has been posing as a major threat to the $45 billion industry that imports rough stones in dollars from foreign countries including Africa and Europe.

The imports of raw materials for making gems and jewellery, which accounted for India's 14% total merchandise exports, stood up at 32% at Rs 72,160 crore in FY 12 against Rs 54,564 crore in previous fiscal.

Worried over rising dollar, diamond exporters have decided to cut down on their rough imports to 30% at the current levels. The rupee has touched its all-time low at Rs 56.38 to a dollar on Wednesday and is flirting with Rs 57.

"If the rupee goes below Rs 60, then we might cut down our imports up to 50%," says Naresh Mehta, secretary of Mumbai Diamond Merchants Association. Diamond, one of the precious gems, trade in India has been growing at 30% soon after recession flared in 2009.

"This could be a roadblock for the industry to grow further and will delay our future plans to become the top diamond trader in the world," he added.