* Platinum prices at discount to gold
* Now 650 jewellers in India offer platinum goods
* Indian Bullion Market Association expects leap in imports
By Siddesh Mayenkar
MUMBAI, May 16 (Reuters) - Platinum jewellery, promoted by Bollywood stars and newly trendy among younger consumers, is slowly beginning to take off in India now the metal is cheaper than traditional favourite gold, and Mumbai businessman Colin Shah is reaping the rewards.
Shah launched a retail venture on Feb. 14 this year, Valentine's Day, after years of exporting gold jewellery, and says he has already garnered several million dollars from the third of his business that is focused on platinum.
Such success is encouraging, as many jewellers in the world's biggest gold market are reporting falling sales, partly due to gold's high and volatile prices.
"It is a new set of customers who are buying platinum. There are two (sorts of) people buying platinum jewellery - one is for gift giving, and the second is people exchanging couple rings," Shah said.
"They are new customers in new categories, which is good for the business," he added. "(We are) growing the business rather than getting into someone else's territory."
With platinum trading at a historically unusual discount to gold, there are now more than 650 jewellers in India who now sell platinum goods, up from 15 a few years ago, a trend that is expected to gain ground in urban areas.
The Indian Bullion Market Association said last month it expects a 50 percent jump in platinum imports in the next year as more participants join the retail fray.
India is a huge jewellery market, where many consumers see precious metals as a means of storing wealth.
In a report launched in London this week, precious metals refiner Johnson Matthey said Indian consumer sales of platinum jewellery had increased by almost a third to 80,000 ounces last year -- still tiny compared with the 24.5 million ounces of gold jewellery sold last year, but a big step forward.
Given the pressure on platinum demand from industrial users, who are the main buyers of the metal, its growing profile among jewellery-hungry Indian consumers is welcomed by the industry.
A new platinum contract was launched in India in April, available in as low a denomination as one gram, as well as a 100 gram contract aimed at jewellers, to serve the growing market.
Platinum prices, once three times that of gold, are now at a discount to the yellow metal, attracting companies such as Shah's Kama Jewellery, which exports to the United States and the European Union, into retail.
"Now that platinum prices are nearly the same as that of gold, it is easier to convince clients," said Shah, whose company derives 35 percent of its local jewellery business from platinum and expects a rapid expansion in sales.
Spot gold was trading at around $1,549 an ounce on Wednesday, while platinum was at $1,436 an ounce.
Platinum marketing body Platinum Guild International says it sees platinum gaining ground in India among younger consumers, especially younger women in the 18-35 age bracket. Platinum sellers are also broadening their consumer segment by including men's jewellery in their offering.
PGI launched a campaign a decade ago to promote platinum in the Indian market, centred on three major cities. Jewellers have since drafted in Bollywood stars like Katrina Kaif and Sonali Bendre to add glamour to their platinum marketing.
"All people, be they upper middle class or middle class, have started buying platinum," said Rachana Shah, a sales executive at Tribhovandas Bhimji Zaveri (TBZ) in Mumbai's Zaveri Bazaar, holding a ring band of 3.76 grams worth 17,850 Indian rupees ($330).
"White gold has been replaced by platinum as it is cheaper," Bhargav Vaidya, an analyst who advises jewellery companies, said. " M o stly young (people) are falling prey to it, as it is new and trendy."
The metal is now available in 27 cities in India, although India remains overwhelmingly a gold market due to a long cultural and historic association with the metal.
While it risks being overtaken by China as the number one gold consumer, gold volumes sold in India are still enormous - more than four times those seen in the United States last year.
Even after last year's growth, Indian platinum jewellery consumption is still less than half of U.S. demand and much less than a tenth of that of China, the world's biggest consumer of the metal.
"Platinum is not a competitor to gold," Kumar Jain, vice-chairman of the Mumbai Jewellers Association, said. "It has its own market, but... platinum does not shine like gold." ($1 = 53.8050 Indian rupees) (Reporting by Siddesh Mayenkar; Editing by Jan Harvey and Anthony Barker)