MUMBAI, May 17: Gem and jewellery from India seem to be losing their sparkle abroad. Exports of gem and jewellery (including diamonds) from India have declined by 4 % to $ 5,243 million in 1996-97 from $ 5,458 million in 1995-96. Out of this, the fall in the export of diamonds was even more alarming. The exports of cut and polished diamonds at $ 4,234.47 million has shown a decline of 9.17 % over the previous year's figure of $ 4,661.90 million.

Despite this fact, the gem and jewellery sector continues to be one of the largest foreign exchange earners for the country accounting for nearly one-fifth of the country's exports.

Diamonds, gold jewellery and coloured gemstones constitute almost 98 % of the gem and jewellery export basket, according to the latest figures released by the Gem and Jewellery Export Promotion Council (GJEPC).

``Out of USA, HongKong, Belgium, Japan and Thailand which account for amost 88 % of the total exports of cut and polished diamonds from India, only exports to the USA have registered a marginal growth of 0.07 % over the previous year,'' trade sources said.

According to Praveen Shankar Pandya, chairman, GJEPC, the continuing recession in Japan and Europe, psychological impact of the breaking up of single channel supply, high rate of interest on post shipment credit and excess inventory leading to low profitability are some of the reasons for the decline in exports of diamonds.

Further, some exports of loose diamonds have got divered into studded jewellery which is reflected in the jewellery export figures,'' he said.

Exports of gold jewellery at $ 745.35 million have registered a growth of 30.96 % compared to $ 569.16 million of the previous year. USA, UAE, UK, HongKong, Kuwait and Japan accounted for 88 % of India's exports of gold jewellery, both plain and studded. Except Japan which shows a marginal decline of 4.82 %, exports from India have shown a growth to all major markets.

Although gold jewellery exports have surpassed the target of $ 680 million, it could have been much higher if there was an uninterrupted supply of gold throughout the year.

There is tremendous potential for growth in the export of gold jewellery. The world market for gold jewellery is between $ 65-70 billion at retail level and exports from India account for barely one per cent of this market,'' Pandya said.

However, exports of coloured gemstones at $ 136.80 million have shown a decline of 7.03 % compared to $ 147.14 million of the previous year.

Except for the USA, all the major markets like HongKong, Thailand, Japan and Germany reveal a downward trend. The USA has recorded a marginal growth of 8.26 %.

Stating the problems faced by the coloured gemstones sector, Pandya said the prolonged recessionary conditions in major markets have affected export considerably. The non-availability of good quality rough gemstones is also a perennial problem, he said.