Jewellery sales are sparkling across the UAE this year, despite higher import duties in India putting off buyers from the subcontinent.
Gold and diamond executives have enjoyed sales growth of up to 30 per cent in the first half of the year but the number of Indian buyers has plunged following the increase in import duty from 2 per cent to 4 per cent earlier this year.
Firoz Merchant, the chairman of Pure Gold Jewellers, said tourists had made up the biggest bulk of sales, with buyers from Japan, China and Europe.
"Yes, we lost business from the Indians but we gained from other parts of the world," he said. "The first half sales were still very good compared to last year."
Mr Merchant added sales were up about 25 per cent but declined to give a revenue figure.
Liali Jewellery said it had achieved a sales increase of 30 per cent in the first half as it catered to the Arabic-speaking population of the UAE, who had been major buyers so far this year.
"The overall year has been good," said Oofrish Contractor, the marketing manager at Liali.
"The market is really positive. Definitely tourism is good but the growth has been among residents this year. We sell more to the residents than tourists because we market to the resident population."
Other retailers were not so upbeat, having suffered from India's decision to increase import duty. The world's biggest gold bullion buyer hiked the tax on gold imports in March after the current-account deficit widened.
Shamlal Ahmed, the managing director for international markets at Malabar Gold & Diamonds, one of the biggest jewellery chains in India, said sales throughout the Arabian Gulf had been flat in the first half of the year as the majority of its customers were Indians.
"We managed to maintain the same sales but we would normally get an increase of 10 to 15 per cent," he said.
"But in the previous months we have not seen that kind of growth."
He added tourists from India buying in the UAE and Indians living in the Gulf had been squeezed by the increased duty.
Nevertheless, on the back of strong sales, the jewellery industry in the Middle East is experiencing huge levels of investment.
Malabar, which is based in Dubai, is preparing to invest US$700 million (Dh2.57 billion) in a global expansion plan to become the world's largest jeweller. Malabar's goal is to open more than 150 outlets in India, the Gulf, the Far East, the United Kingdom, the United States and Canada, creating 15,000 jobs and is investing $100m in marketing and brand initiatives.
Pure Gold Jewellers is also looking to invest Dh1bn in new stores and factories during the next five years and the company has entered into talks with a number of Islamic banks to help finance the expansion.
Mr Merchant said the company would enter Saudi Arabia, Sri Lanka, the Maldives and Malaysia with new stores next month.
This year, Joyalukkas said it would raise $100m in a syndicated loan from a consortium of banks to expand its network of stores.
Gold has decreased 6.4 per cent in the past six months and was trading at $1,628 per ounce yesterday.
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