By: Anurag SharmaKerala-based jewellery major Malabar Gold & Diamonds expects the overall revenue to be approximately USD 1.5 billion by the end of year 2023. In an email interaction with ETRetail, M P Ahammed, chairman of Malabar Group shares his insights on changing consumer sentiment and global demand for Indian jewellery. Edited excerpts:
How do you see India’s gold demand in 2022 considering the impact of the coronavirus pandemic seems to be easing?
As the economy is steadily regaining its momentum, it will positively boost the consumer sentiment. The pent-up demand will surely strengthen the retail sales of gold jewellery. A lot of gold jewellery purchases and investment plans that were postponed during the pandemic times by the consumers will eventually make their way to the markets in 2022. According to a recent World Gold Council (WGC) report, gold consumption in the country during 2021 went up to 797.3 tonnes despite pandemic impact. The extremely strong demand during the October-December 2021 quarter of 343 tonnes further bolstered our demand outlook for 2022.
What about the demand prospects in the Middle East and South East Asia where you also have operations?
Both the Middle East and South East Asia have witnessed strong rebound of gold demand in 2021, which is quite encouraging for the jewellery retail trade of those regions. According to a WGC report, in the Middle East jewellery market, gold jewellery demand in 2021 clocked 159.9 tonne, registering a whopping 41 percent increase compared to 2020 driven mainly by positive consumer sentiment and tourist inflow.
Markets like UAE and Saudi Arabia are witnessing steady growth in gold jewellery demand. Similarly, gold demand in the South East Asia markets has also been witnessing upward movement banking on renewed optimism and safe haven status of the yellow metal. If 2022 remains free from any major disruption, gold jewellery demand will go up in the coming months.
How will the new FTA between India and the UAE change the way India jewellers operate?
UAE is one of the biggest buyers of India jewellery. Jewellery markets of both countries have strong business ties. As the FTA firmly establishes UAE as the ‘Jewellery Gateway’ replacing countries like Hong Kong, Italy, etc., it will further accelerate the retail and wholesale business growth vision of the jewellers in India.
Apart from boosting exports, the FTA is likely to attract opportunities for OEM manufacturing in India for global jewellery brands. Therefore, a section of progressive jewellers may find the developments conducive to diversifying their operations.
Do you see any shifting of businesses from India or South East Asia to the UAE and why?
As the FTA has strengthened the strategic partnership with UAE and enhanced market competitiveness of Indian jewellery through reduction in import duty, I don’t find any reason to shift operations to UAE from India.
Our aim is to enhance manufacturing in India and export to the world. If Govt of India makes policy changes with regard to gold, for example reduction of import duty, manufacturing in the country will increase considerably so that we can exploit the export potential to the maximum.
Do you have any plans of expansions in India or in other regions?
We have a robust growth outlook for India, UAE and South East Asia markets. Our global expansion plan is to increase the number of outlets from the existing 280 to 750 in a couple of years across all the key markets. The three markets act as a springboard for the mission to spread its wings across the globe. Therefore, we have adopted a holistic approach while strategizing our expansion plan. In fact, India will remain a key focus market for us.
Lastly, would India’s gems and jewellery exports and industry jump because of the duties scrapped by UAE?
There will definitely be a positive impact on the overall jewellery exports. However, it’s difficult to ascertain the growth level at the moment, as a lot depends on how the global jewellery demand plays out in 2022 and beyond.
In terms of the jewellery industry, UAE has established itself as the jewellery capital of the world for both gold and diamonds. The total diamond trade in the UAE grew by 83 percent between 2020 and 2021, demonstrating both the industry’s resilience and Dubai’s critical role in the global sector, according to DMCC. This will further grow with initiatives undertaken by the leadership like India-UAE Comprehensive Economic Partnership Agreement (CEPA) that will make UAE the gateway to the world for Indian crafted jewellery.
Our operations in UAE will certainly benefit from the economic and population growth in the country and we expect the revenues to be about USD 1.5 billion by 2023.