Jewellery purchase from the touring non-resident Indians (NRIs) has declined by 50 per cent this season due to cash crunch faced by customers. Jewellers estimate that cash transactions, which make up for about half of the entire purchase of the season, have come to a grinding halt due to the lack of currencies available with NRIs. Card holders, however, continue their purchases as usual. But, uncertainty in the Indian economy, coupled with a sharp decline in the value of the pound sterling (Britain’s currency) against global currencies has held NRIs from aggressive purchase of the precious ornaments.
Normally, NRIs visit their native town in India during December. A lot of NRIs from the UK come back home for holidaying for their return in the New Year. During their stay in India, however, they purchase a lot of precious ornaments, especially hand-made intrinsic designs with the best art work by skilled artisans. Jewellery studded with precious stones including those of colour gemstones, too, remained a preferred choice for them.
“Sales have been very low with a handful of NRI footfalls to jewellery stores so far this year. Apart from demonetisation resulting into low cash flow, weak pound sterling prevented NRIs for aggressive jewellery purchase. So, falling pound sterling made them difficult doing any shopping here in India this year. We estimate NRIs purchase to decline by 50 per cent this year. Apart from that, the current situation is not very enlightening globally for jewellery purchase. Hence, buyers are holding on to their purchase plans,” said Ashok Minawala, director, All India Gems and Jewellery Trade Federation.
During normal years, jewellery sales jump 20-25 per cent with aggressive purchase from NRIs in December. Meanwhile, the value of pound sterling has declined against major global currencies. In the rupee term, the pound sterling is quoted at 84 now against 102 before Britain’s referendum towards its exit from the European Union (Brexit) in June this year. This means, for a pound sterling, Rs 84 are required now against Rs 102 needed for the same six months ago, resulting in the devaluation of 18 per cent. Pound sterling has hit the level not seen in the past several decades.
“Peak jewellery demand is lost because of demonetisation-led currency crisis for consumers including NRIs. Not only jewellery sales, gold import, too, has declined. Importers are carrying forward their quantity in December. They imported in November. Ultimately, there has been a huge impact on jewellery sales,” said Prithviraj Kothari, managing director, RiddiSiddhi Bullions, a bullion dealer in Zaveri Bazaar.
Its consequence has already started being felt now with a number of jewellery manufacturers have started retrenching their skilled workers either temporarily or permanently. Almost 5-7 per cent of skilled and unskilled workers have already moved to their native place.
Rajesh Mehta, managing director of Rajesh Exports, which operates 70 retail showrooms across the country, said, “NRIs jewellery purchase through cards has not been hit at all. Card purchasecontinues as usual. But, cash purchase has reduced to nil. This means, the overall impact on jewellery purchase could be 20-25 per cent this season, especially by NRIs.”
While jewellery purchase by NRIs does not set any trend in India, it adds to the annual volume of sales for jewellers. Normally, jewellers prepare ornaments of NRIs choice three-four months in advance to lure them with unique designs with cultural look.