Rising prices of gold putting pressure on jewellery exporters' margins

JAIPUR: Gem and Jewellery Export Promotion Council has said that the margins of jewellery exporters have shrunk from 15 per cent to less than 5 per cent in the last six months on the back of spiralling gold prices.

"Due to rising prices of the yellow metal, to maintain demand in the global market, exporters are absorbing high input cost, which has left them with a wafer thin margin," Gem and Jewellery Export Promotion Council (GJEPC) Chairman Rajeev Jain said.

This apart, to maintain demand "exporters are trying to push silver jewellery. For that they are making designer jewellery in white metal which otherwise was made in gold only," added Jain.

"Out of every 700 jewellery items, around 500 pieces are being crafted in silver these days. Silver prices are also rising but they can't match the yellow metal's rally," he said.

With gold prices heading northwards, jewellers are increasingly opting for making 'hybrid jewellery'- a mix of gold and silver metals in equal proportion. "It not only helps in keeping a check on prices but also produces trendy jewellery items. Among fashion jewellery items, we are selling gold coated silver jewellery and affordable light weight trendy gold items," said Sara Jewels Managing Director Ajay Kala.

However, this 'gold rush' is not likely to impact the growth of gems and jewellery exports.

The council closed this fiscal year with a growth of 30 per cent over the last year. Emerging strongly from the global recession, it has clocked exports of around USD 28 billion which is around 15 per cent of the country's total exports of USD 200 billion.

"US is still the biggest market for us. We have been able to increase our share in the US market from 26 per cent to 34 per cent. We have also strengthened our presence in other countries like Belgium, Israel and Russia. We expect to grow at 15 per cent in the next fiscal," said Jain.