India’s gems and jewellery exports are in for a tough year as the global economy witnesses a slowdown but the industry body is hopeful for a revival from July onwards.
“We export majorly to the US but also to Hong Kong. The Chinese market was expected to open with a bang but is instead reviving slowly. We expect the opening up of the Chinese economy will help Indian exports,” Gems and Jewellery Export Promotion Council (GJEPC) Executive Director, Sabyasachi Ray told Moneycontrol.
As per GJEPC estimates, says Ray, the US market too should see a revival after July as inflation comes down, manufacturing grows and commodity pricing stabilises.
The US debt ceiling issue being resolved may provide a solution and bring back positivity in the market, he added.
However, the future for the industry looks challenging this year, he says.
India’s gems and jewellery exports witnessed a huge drag in April, falling by 30 percent year on year as global discretionary spending saw a slowdown.
A year after the covid pandemic was the honeymoon period for the sector, says Ray.
“Demand came back in a huge manner and exports jumped. People had hoped for the same to continue but it is not the case anymore,” the industry representative added.
The gems and jewellery exports have contracted in seven of the last 10 months- the result of a direct slump in demand from the US and Europe, as per Indian trade officials.
An internal industry report by GJEPC finds that demand from the US, UAE and Hong Kong- the biggest export markets for Indian gems and jewellery fell by over 30 percent in recent months.
“Demand from the US fell throughout 2022 and continued to decline in 2023. In 2023 also, imports of the US from India declined by 27 percent in January and 31 percent in February to $730.24 million and $628 million as compared to $995 million and $922 million last year in the same period. This trend seems to be continued in the following months and hence April has shown a significant decline,” said Ray.
People in Western countries right now are apprehensive of their financial standing, and do not want to spend on luxury goods.
Consumers have become more inclined towards plain gold jewellery due to increasing rates. Due to this change in demand inclination, retailers are suffering from over inventory in diamond studded jewellery and hence, have stopped placing new orders of Diamond Jewellery, he added.
Declining demand for cut and polished diamonds is another major reason for the degrowth in gem and jewellery exports from India as the commodity holds a 60 percent share in overall gem and jewellery exports from the country, Ray adds.
Other issues that trouble India’s gem and jewellery industry include issues in the supply of raw materials.
“India depends highly on imports when it comes to raw materials and Russia is a big supplier,” Ray points out.
However, USA’s sanctions on Russian goods have hampered the supply of small-sized diamonds to the country.
Also read: UK extends Russian export ban to diamonds, metals over Ukraine conflict
India’s imports of rough diamonds have reduced to 134.70 million carats in FY2023 from 166.61 million carat in FY2022, recording a degrowth of 19.15 percent, the GJEPC report reads.
Even though the sector has seen a steep fall, the industry remains hopeful for a revival in demand in the second half of the year.
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