* Jewellers promote lower-carat products, launching stores
* India's H2 gold imports seen down by a qtr vs
* India has clamped down on gold imports to tame deficit
By Siddesh Mayenkar
MUMBAI, July 5 (Reuters) - Jewellers in India are banking on
a growing appetite for diamonds in the country and resilient
demand for gold among its non-residents to offset a slowdown
caused by a government clampdown on imports of the precious
Leading jewellers such as Titan Industries and
Gitanjali Gems are aggressively promoting diamond
jewellery, which uses less gold, and opening more stores in
cities such as Singapore and Dubai in an effort to spur sales.
The moves could help create alternative demand sources for
the battered yellow metal in the medium term and help somewhat
cushion price declines.
"We are moving to diamond jewellery more aggressively,
introducing lower-carat jewellery and also pushing silver
jewellery," Mehul Choksi, chairman and managing director of
Gitanjali Gems, told Reuters.
Gold forms an essential part of a bride's trousseau in
India, the world's top consumer of the metal, where it is also
considered auspicious for religious rituals. But its imports
have contributed to a burgeoning current account deficit.
As a result, India has since May raised gold import duties
and tightened credit availability for importers of the precious
After data showed Indians imported a record 162 tonnes of
gold in May, jewellers joined a government campaign to cut gold
That, and a weakening rupee, are inflicting pain on
jewellers, which they are now seeking to lessen by focusing on
"Jewellers are thinking of introducing 14-carat jewellery.
Low-carat jewellery will help us to control imports as well,"
said Haresh Soni, chairman of the All India Gems and Jewellery
Trade Federation, which groups more than 40,000 members.
Jewellers mix metals like silver and copper to reduce the
purity of the yellow metal. Diamond jewellery uses 20-25 percent
less gold compared to a normal 22-carat jewellery piece,
according to Choksi of Gitanjali Gems.
Diamond jewellery sales are increasing, said Kamal Gupta,
director at PP Jewellers in New Delhi, adding rising income of
the lower middle-class pushes a switch from gold to diamond.
Demand for the lower-carat jewellery is seen coming mainly
from younger consumers, who unlike earlier generations, are not
fastidious about buying a 22-carat gold necklace.
Following the government's measures, gold imports by the
world's top metal importer in June may be just 37-40 tonnes
against a monthly average of 70 tonnes, according to the trade
federation's Soni. And imports in July-December may decline by
20-25 percent compared to the first half of this year, he said.
Anticipating further restrictions at home, some jewellers
plan to increase their overseas presence to boost sales,
especially to non-resident Indians (NRIs).
"For those who are in the jewellery business, Middle East
countries are very attractive now," said Gupta from PP
Jewellers. The company is currently "working on" opening stores
in Dubai and Singapore, according to Gupta.
Gitanjali plans to open more stores overseas in the United
States, Middle East, China and Japan, and expects to increase
sales by 50 percent from its international operations over the
next 18 months.
($1 = 60.1150 Indian rupees)
(Additional reporting by Jan Harvey in London; Editing by Nidhi
Verma and Muralikumar Anantharaman)