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Jewellers hope for revival in 2019

Floroscent cover story

“Even though 2018 went by reeling under the aftermath of the demonetisation and GST, the GJ industry is upbeat about 2019 and is working out new strategies to bounce back. Speaking to the GJ industry’s thought-leaders, team Floroscent brings to you different views and insights into what will impact the sector in 2019.”

A new year is a great time to reassess everything you’ve been doing and find ways to improve your business strategies. The gem and jewellery industry, ended the year 2018 on a mixed note in both, exports and the domestic market. Although the exports grew by approximately 18 percent in October, the sector did not witness significant growth in 2018. Moreover, gold prices increased by over 6 percent in the last one year, impacting the consumption demand.  Also, after the PNB banking scam was brought in light during February 2018, financial institutions turned ultra-cautious in lending to the sector and have even blocked credit to exporters. All through the year, the industry worked tirelessly towards overcoming the challenges. But will the industry get back on the track or will continue to see more upheaval? The question remains to be answered. Yet trade experts are expecting a revival in 2019.

Focus on exports

On account of demand slowdown in major developed markets, India’s gem and jewellery exports contracted by 6.77 per cent to US$ 20.74 billion in April-November period of 2017-18. According to Pramod Agrawal, chairman, Gem and Jewellery Export Promotion Council (GJEPC), the industry will bounce back and the exports will grow. “The year 2019 looks promising with the US – our prime market, witnessing rise in GDP and increased consumption expenditure. Focus would be to grow the established markets such as the USA, Middle East and Hong Kong/ China and explore and penetrate new markets,” he said.

 

Pramod Agrawal

“The year 2019 looks promising with the US – our prime market, witnessing rise in GDP and increased consumption expenditure. A series of initiatives are planned to bring favourable environment for trade and business and sincerely, this would yield results in the form of increased exports in 2019.” Pramod Agrawal, Chairman, GJEPC Ltd.

 

He mentioned that trade promotions for products across the GJ sector with special initiatives for MSME are on the anvil. “A series of initiatives are planned to bring favourable environment for trade and business and sincerely, this would yield results in the form of increased exports in 2019,” he hoped.

Marginal growth in domestic market

The growth in exports will largely depend on the appetite of the international markets. But will the domestic market shine in 2019? In its latest report, credit rating agency, ICRA Limited has projected a stable outlook on the gold jewellery retail industry in India. “Over the medium to long term, gold jewellery demand growth is projected at 6-7 per cent supported by the cultural underpinnings, evolving lifestyle, growing disposable income, favourable demographic dividend and the growing penetration of organised sector,” the report stated.

Sharing his views on the state of the jewellery market in 2019, K Srinivasan, Managing Director, Emerald Jewel Industry India Ltd., Coimbatore said: “In my view, the sluggish scenario that prevailed in 2018 due to the banking and government policies will continue in 2019 as well. Under this circumstance, only the organisedjewellers could move forward with a marginal increase.”

 

K. Srinivasan

“The sluggish scenario that prevailed in 2018 due to the banking and government policies will continue in 2019 as well. Under this circumstance, only the organisedjewellers could move forward with a marginal increase.” Srinivasan, MD, Emerald Jewel Industry India Ltd

 

He opined that a reduction in the gold import duty will be helpful in drastically reducing the parallel market and the cost of jewellery will slightly come down. Highlighting the government’s plan to introduce mandatory hallmarking in the country, he said, “Mandatory hallmarking is a welcome move for the trade, as the customers get the right purity of metal for their money. It will arrest the malpractices by some jewellers in the market.”

 

Pramod Mehta“The year 2019 looks promising and the retail market is showing signs of recovery. But the true picture will emerge post the 2019 general elections only. After the election, if a stable government is formed, then it will be good for the trade and economy.” Pramod Mehta, Director, Shilpi Jewellers Pvt. Ltd.

 

For Pramod Mehta, Director, Shilpi Jewellers Pvt. Ltd., Mumbai, the trade situations in the country will only turn favourable after the general election in 2019 is over. “Last year was challenging for the entire trade, as the aftermaths of Demonetisation and GST somewhat kept the buyers away from the luxury market. However, the year 2019 looks promising and the retail market is showing signs of recovery. But the true picture will emerge post the 2019 general elections only. After the election, if a stable government is formed, then it will be good for the trade and economy,” he explained.

Budget will boost retail growth

To get around the current situation and push jewellery demand back on a steady growth track, jewellers want the government to take stock of what is ailing the industry. Although, the key industry demand for the reduction in the import duty of raw materials like gold, silver, cut and polished diamonds andcoloured gemstones was not fulfilled in the interim budget, jewellers are happy with the relief given in direct taxes to the middle class and farmers as it will be good for increasing the jewellery demand in the country.

According to Vaibhav Saraf, Director, Aisshpra Gems and Jewels, the tax measures announed in the interim budget for the salaried class and the benfeits offered to the farmers’ community will eventually lead to a boost in public spending. “In my opinion, the budget brings with it Ache Din. With farmers given Rs. 6000 per annum it will help them buy better raw material which will lead to a better yield and that will obviously lead to a better disposable income for them. We cater to the agricultural market majorly and therefore it will impact on sales positively. Relief in income tax slab will also result in higher disposable income for individuals,” he shared.

 

 Vaibhav Saraf“The Budget brings with it Ache Din in my opinion. With farmers given Rs.6000 per annum it will help them buy better raw material which will lead to a better yield, which will obviously lead to a better disposable income for them.” Vaibhav Saraf, Director, Aisshpra Gems and Jewels

 

Saurabh Gadgil, CMD, PNG Jewellers and National Vice President, India Bullion and Jewellers Association (IBJA), too feels that the interim budget seems to be in a progressive direction as it lends support and upliftment for the SMEs, MSMEs, agricultural sector and the tax paying middle class. “The relief in income tax and various other exemptions, favourable policies towards the SME and agricultural sector will have a directly proportional effect on the gems and jewellery industry. People will have disposable income and it will surely lead to retail growth,” he mentioned.

 

Saurabh Gadgil“The relief in income tax and various other exemptions, favourable policies towards the SME and agricultural sector will have a directly proportional effect on the GJ industry. People will have disposable income and it will surely lead to retail growth.” Saurabh Gadgil, CMD, PNG Jewellers and National Vice President, IBJA

 

He added that the budget also indicated that the ministry feels it is time to clean and organise the gems and jewellery industry. “By introducing a comprehensive gold policy to develop gold as an asset class, provisional guidelines are being made for the Gold Spot exchange, Gold Deposit account, Gold Monetisation Scheme, this will form a comprehensive mines to market gold policy in the coming months. We are hoping this budget will bring about the required confidence in the economy and benefit the industry in the long run,” he hoped.

Retail landscape in 2019

Last year was no doubt quite challenging owing to unpredictable and fluctuating demand from the buyers. The year 2019 looks promising for most of the jewellery retailers, as they hope to continue the momentum in sales.

Vaishali Shah, Director, Rivana Gold and Diamonds, is of the opinion that the jewellery sales throughout the country is all set to grow in 2019 due to the overall evolving lifestyle. “Gold as a metal continues to give a good return on investment compared to many savings plans available, as current market conditions are volatile and therefore, reinstating consumer’s faith in the category. In addition, the fact that this calendar year also brings with it a number of festivals, wedding season being ongoing till May, followed by festive season starting from August, it is going to be a golden year for the sector,” she highlighted.

 

Vaishali Shah “The fact that this calendar year also brings with it a number of festivals, wedding season being ongoing till May, followed by festive season starting from August, it is going to be a golden year for the sector.” Vaishali Shah, Director, Rivana Gold and Diamonds

 

Commenting on the movement of gold prices she said: “It has been predicted that 2019 may see the end of interest rate hikes in the US economy, which will then possibly result in the rise of gold prices globally. The price of gold is going to grow in 2019 at a predicted market rate of around five to 10 per cent.”

About the outlook on jewellery sales in 2019, Kunwar Sahib Singh, Creative Head and Designer, Motiwala & Sons, said that the jewellery industry is growing steadily and is forecasted to tap a good growth mark of six to seven per cent during the year. “Previously dampened by the demonetisation and the sudden GST turmoil, consumer appetite for jewellery is slowly getting back on track and becoming more voracious than ever. While the demands for contemporary jewels that goes well with both, ethnic and western attires are soaring high, the request for heritage and temple jewels are also in high numbers. Moreover, as platinum and diamond jewellery will witness an increase in demand especially during specific holiday seasons, silver jewels will continue to offer boho-vibe with its stable price,” he added.

Another prominent jewellery retailer, Rohan Sharma, Managing Director of RK Jewellers South Extension 2, predicted that not only the business will improve in 2019, the industry will see more stable jewellery trends as well. “The entire 2018 was unexpected for the jewellery market, as we had seen several trend changes, especially in bridal jewellery. Bollywood wedding had revolved the entire table of jewellery trends that kept us on our toes to offer the same styles to our customers. We are very excited for 2019, as we expect it to be better in terms of business and more stable in terms of trends than 2018,” he hoped.

 

Ishu Datwani“2019 will be very good for the gem and jewellery industry, as the last two years have been slow. At present, the sales graph is on an uptrend. Business has been good in the last few months and we are looking forward to a good buying season ahead.” Ishu Datwani, Founder, Anmol

 

Admitting that in the past few years the sales graph had been down, Ishu Datwani, Founder, Anmol said that 2019 will be very good for the gem and jewellery industry, as the last two years have been slow. “At present, the sales graph is on an uptrend. Business has been good in the last few months and we are looking forward to a good buying season ahead,” he revealed.

Leaving the past behind, the industry is working overtime to make the most of the opportunities the 2019 has to offer.

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