MUMBAI Gold jewellery exports climbed in August from the previous month on improving U.S. demand even though exporters faced tight supplies of the metal on Reserve Bank of India (RBI) steps to tackle the country's rising trade deficit.
Exports could climb in the coming months as the Reserve Bank of India has tied metal imports by the world's biggest bullion buyer to its overseas shipments and the government recently clarified how the rule will work, potentially easing the tight supply situation for exporters.
India exported $561 million worth of gold jewellery in August compared with July's $441.4 million, the Gems and Jewellery Export Promotion Council (GJEPC) said in a statement on Tuesday. In tonnage terms, this would mean 12-14 tonnes depending on quality.
"Exporters were using their old stocks... August to November have generally been stronger months, and we have seen more sales to the U.S.," said Colin Shah, managing director of Kama Schachter, a gold jewellery exporter based in Mumbai.
India's efforts to stem buying of gold, the second-biggest item in its import bill, and protect its currency include a rule that 20 percent of all imports must be turned around and sold for export as jewellery.
But confusion over how the rule would work had virtually stopped imports since the end of July. They are expected to resume soon after a high-level meeting of government officials last week to clarify the rules.
"Right now, their issue is getting the raw material even if they have export orders. From October onwards, exports will recover after exporters start getting delivery of the yellow metal from the banks," said Shah.
Most banks would re-start placing orders with their suppliers after their stock, which is estimated to be at about one tonne, is cleared by the customs department at the airports just ahead of the peak Christmas season. A majority of India's gold imports are made through banks.
India shipped out $2.68 billion worth of gold jewellery in value terms from April to August, down 59.4 percent on year. Total gems and jewellery exports fell 13.4 percent to $13.84 billion during the same period.
Exports usually total only about 60-70 tonnes per year and compete for markets from the Middle East to the United States against jewellery from Thailand and Turkey.
India had imported a record 162 tonnes of the metal in May, about three times the normal monthly average. Imports totalled more than 380 tonnes in April-July.
India's total gold imports could now be below 750 tonnes in the year to March 2014, Arvind Mayaram, economic affairs secretary at the finance ministry said last week, about 60 tonnes per month under the new rule.
Silver jewellery exports rose 68 percent to $120.11 million in August on year, and jumped 143 percent in April to August to $634.16 million.
"Exports of silver jewellery will continue to rise as a majority of the jewellers who are in fashion segment have turned to silver," said Ariez Tata, managing director of Mumbai-based Yash Jewellery, which ships 75 percent of its output to the United States. (Editing by Muralikumar Anantharaman)
Trending On Reuters
India has waived retrospective imposition of a minimum alternative tax (MAT) affecting foreign funds, the Finance Minister said on Tuesday, a move that could resolve a dispute that had shaken investor confidence. Full Article