India's exports of gold jewellery slipped 7 percent in October as government restrictions continued to hit imports, and the trend is likely to continue for the rest of this year, industry experts said.
India's government has slapped a record 10 percent import duty on gold, its second-biggest import after oil, as it seeks to curb a swollen current account, and has said 20 percent of all imports must be turned around and exported as jewellery.
While exporters had increased sales during August and September, the measures delayed further supplies just as demand from the United States for the Christmas season weakened.
Gold jewellery exports fell 6.9 percent in October from the previous month to $608.95 million, the Gems and Jewellery Export Promotion Council (GJEPC) said in a statement.
Exports so far this fiscal year, from April to October, slid nearly 55 percent to $3.95 billion, the GJEPC said.
"Even if we have demand we are unable to supply due to inconsistency in securing gold," said Rajiv Jain, managing director with Sambhav Gems, an exporter to the United States andEuropean Union.
In order to prove export quantities, importing banks and trading agencies are required to submit the export performance of their first two import shipments while bringing in the third lot. That has meant irregular supplies for what used to be the world's biggest buyer of bullion.
"Now there is a problem with supplies of gold once again, which will weigh on the exports of November and December," said Pankaj Kumar Parekh, vice-chairman of the GJEPC.
Falling exports will have a knock-on effect on future imports because of the ties between the two and that will hurt domestic jewellers who should be seeing surging demand as the wedding season gets into full swing.
In October, India imported 23.5 tonnes, less than half last year's average monthly consumption of 60 tonnes, although it saw resurgence in August and September, when purchases slowed to a trickle as buyers struggled to work out the new restrictions.
Premiums paid by Indian buyers over London gold prices surged to a record $125 an ounce in October and tighter supplies in the next couple of months could push them even higher, Parekh said.
That would hurt domestic jewellery makers like Gitanjali Gems and Tara Jewels.
The World Gold Council (WGC) cut its forecast for Indian gold demand earlier this month, predicting that the country could also lose its crown as the world's biggest consumer of bullion toChina.
The WGC said Indian demand could be 900 tonnes in 2013 from its previous forecast of 1,000 tonnes. Demand is met partly by recycling, which rises when imported supplies dry up.
In September, as the restrictions bit, an Indian finance ministry official estimated gold imports would be 750-800 tonnes in the fiscal year to March 2014, down from 845-850 tonnes in 2012/13.
Meanwhile, India's exporters have been pushing silver jewellery and exports rose 52.73 percent in value terms to $109.89 million in October from a year ago.
The country's total gems and jewellery exports fell 6.67 percent to $20.94 billion between April and October.
Source:- profit.ndtv.com
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