India gold jewellers: festival sales down sharply

* Several jewellers say sales down 20-40 percent on year

* India gold price up 27 percent on year weakens demand

* Festival seals fate of poor first-half India sales

By Ruchira Singh and Siddesh Mayenkar

MUMBAI, April 27 (Reuters) - Several Indian gold jewellers said their sales on a major gold-buying festival on Monday are likely to be down 20-40 percent on year, with rising prices and an economic slowdown hitting consumers' spending capacity.

Akshaya Tritiya, one of India's two biggest gold-buying festivals, is the pinnacle of sales in the first half of the year, and offers pointers to full-year demand.

"This year is more difficult than last year," said T.K. Chandiran, managing director of KTM Jewellery Ltd in Coimbatore, in the southern state of Tamil Nadu. "Sales could be only about 60-70 percent of last year."

Demand has already been very weak in 2009, with imports at 2.7 tonnes for January to March, down 96 percent from a year earlier, data from Bombay Bullion Association (BBA) shows.

For a graphic on month-wise imports of gold from the BBA, click on: here

Akshaya Tritiya, when people believe buying gold will lead to prosperity, is more popular in south India where jewellers open shops early in the morning and carry on selling till the last of customer leaves.

"They have a religious belief so they are buying, but the quantity is less," said Jitendra Vummidi, partner with Vummidi Bangaru Jewellers in Chennai, the capital of Tamil Nadu.

A dealer in a large state-run trading company that imports gold and sells in the wholesale market said sales were down 20 percent this month from a year earlier, showing jewellers bought less to prepare items for sales on the festival day.

On Monday, India's gold price MAUc1 was at 14,780 rupees ($294) per 10 grams, up 1 percent from Saturday and 27 percent over the past year. In global markets, gold XAU= jumped to its highest in almost four weeks as fears of a global flu pandemic prompted investors to seek safer assets. [ID:nSP431510].

DISCOUNTS

If the early indications turn out right, sales this Akshaya Tritiya could be lower than last year, and sellers are offering incentives to win business.

"I am giving gold at 50 rupees less per gram," said Princeson Jose, director of Prince Jewellery also in Chennai. "Everybody is doing it so I can't stay away from it."