India’s jewellery exports are likely to decline 10 per cent in 2015-16 to a six-year low due to weak demand in the US and the European Union.
Jewellery exports declined 13 per cent in April-November 2015 to $21.45 billion from $24.70 billion in the corresponding period a year ago. With hardly any occasion left for fresh jewellery purchases in the West, chances of an export recovery are slim. Sentiment was upbeat in the US during the year-end season. The country consumes 38 per cent of the world’s jewellery production and the 45-day season ending in February contributes 40 per cent of annual sales in developed countries.
“A marginal recovery in exports cannot be ruled out. But, given that exports were 13 per cent lower in the first eight months, the financial year may end with a 10 per cent decline,” said Vipul Shah, managing director and chief executive officer, Asian Star, a city-based jewellery exporter.
Praveen Shankar Pandya, chairman of the Gems and Jewellery Export Promotion Council (GJEPC), had forecast a 25 per cent decline in exports this season. “But, the season has been much better,” he said.
Diamond De Beers, Alrosa and Rio Tinto have lowered their production targets for 2015. However, they are yet to announce actual cuts.
Indian importers of rough diamonds have cut purchases to reduce inventory. The GJEPC estimates India’s rough diamond imports to have declined 27.15 per cent to $8.65 billion during April-November 2015 from $11.87 billion in the corresponding period a year ago.
"India diamond processors have reduced their import of raw material in commensuration with global demand. As a consequence, overall inventory level has declined to the manageable level of 4.5 months as compared to over 6 months a recently," said Shah.
Interestingly, according to reports, Chinese government has strengthen regulations to discourage spends on luxuries in order to bring its economy back on growth path.