Russia-Ukraine war may lead to job loss, diamond shortage during upcoming festive season, says GJEPC chairman

Representative image.

In an interview with CNBC-TV18, Chairman of Gem and Jewellery Export Promotion Council (GJEPC) Colin Shah said there may be a shortage of diamonds and job losses if the Russia-Ukraine war continues for a prolonged period.

However, due to a hefty demand from weddings and Akshaya Tritiya, the import of gold in India saw a massive rise in May.

In May 2022, India shipped in 101 tonnes of gold which is a massive hike compared to 13 tonnes in the same month last year. The import saw a jump of more than 677 percent YoY in May and it’s to be noted that it was also possible due to the decline in prices with gold touching a new low of Rs 49, 572 per 10 gram in May.

Despite that, it is expected that the imports will decrease in June as gold prices have rebounded and are trading around Rs 51,000 per 10 gram presently.

However, even with June in sight and COVID numbers rising again in India, Shah said the bigger concern is the conflict between Russia and Ukraine.

“The big concern right now for the jewellery industry is the Russia-Ukraine situation. Due to the sanctions put on Russia, 30-35 percent of rough diamonds which come from the Russian side have not come to India. So that is leading to some amount of unemployment on Surat side.”

He added that it is a “big worry” for the industry right now.

“There are two things which will happen here. One is the expected unemployment if the war situation continues for a prolonged period, and secondly we may have shortage of diamonds in the coming festive season. With 30-35 percent supply gone, we are expecting a shortage especially when demand comes up in August-September. So, those are two worries for the industry right now.”

Export Front

Commenting on market demand for gold, Shah said that jewellery exports to Amercia, Gulf, and Europe continue to be strong but China with its massive lockdown has been a dampener.

“On the export front, America still continues to be strong in spite of having high inflation numbers. The Gulf region exports are doing well, Europe is doing well. However, the worrisome region for jewellery exports is China. They have had massive lockdown and many parts of the country still haven’t opened up. So, the worrisome part is China,” he added.

De Beers too has raised prices of small precious stones by 5-7 percent at its sale this week in Botswana, according to people familiar with the trade.

He said the domestic industry has slowed down a little bit in the last couple of weeks compared to what it was in the corresponding period last year. But as soon as the festive season starts from Raksha Bandhan, things should be back to normal.