The gold prices have grown by around 30 per cent in last one year raising the doubts in the growth of sales. “People continue to buy gold for weddings and other special occasions even at these prices. However, the people are buying less gold even though they are spending same amount of money. There is also evolution of things like hollow jewellery, which make the jewellery look heavy but the weight is lower,”said Sanjeev Khaira, MD and country head, UBM India.
People buying as an investment are concerned at the moment because of the large depreciation of the rupee value. Even though, global prices are growing at a steady pace, due to 20 per cent depreciation of rupee against dollar in last 18 months pushed the Indian gold price drastically. On the flip side, the uncertainties in Euro zone, North America and manufacturing slow down in China raised concerns about traditional equity markets pushed the investments in commodities. The value of currency is also getting devalued over time. This attracted attention to gold and increased its sales, he said.
Talking about the challenges of India’s gems and jewellery industry, Sanjeev said, “Lack of skilled labour and artisans is one of the important challenges the industry is facing today. It is getting more and more difficult to recruit and train people. Traditionally, the greatest strength of Indian industry is its highly skilled workforce at reasonable wages.”
However, to counter balance this, many businesses invested heavily in manufacturing. There are some sections of buyers, who are still interested in handcrafted jewellery and ready to pay premium for it. The demand for the handcrafted jewellery will continue as long as this is the case.
Exports contributed significantly for the growth of industry. The growth in the sector was primarily driven by gold jewellery which registered an increase of 30 per cent in 2012. The exports grew from `57,747.67 crore in 2010-2011 to `79,430.26 crore in 2011-2012. The export is mainly to North America, North Africa and Middle east where there are Asian communities, he explained. The total size of the gems and jewellery industry (both domestic and exports) is around `4,15,000 crore.
The financial crisis in other parts of the world may have temporary effect on the growth of the industry. The growing middle class, young population to get married will continue the sales of jewellery in the Indian market, he added.