After growth in first half, jewellery exports may face challenge in H2

After witnessing a cumulative growth of 6% during the first six months of FY23, the second half of the year could be slightly 'challenging' for exports of gems and jewellery items

After witnessing a cumulative growth of 6 per cent during the first six months of FY23, the second half of the year could be slightly ‘challenging’ for exports of gems and jewellery items from India, amid uncertainties in some of its largest markets such as China, said Gem and Jewellery Export Promotion Council (GJEPC) Chairman Vipul Shah.

“Currently, the sector is cautiously optimistic (in terms of the sector's outlook). We are seeing rising interest rates (in the global market), and the ongoing Russia-Ukraine war. We don’t know what will be the outlook of the Chinese market, with the new five-year tenure of the leadership in that country. All these (factors) need to be looked at,” Shah told Business Standard in an interview.

According to Shah, during the first half of the current financial year, the gems and jewellery sector has grown and has outperformed as compared to other sectors. The growth was close to 17 per cent in September at $3.76 billion and 6.31 per cent during April-September at $20.58. The export target for FY23 is $45.6 billion.

“The second half of the year will be a bit challenging. However, If certain needs of the industry are looked after by the government, we will try to achieve our target.

The only concern is because of the lockdown, the China market is disturbed and that was a huge market,” Shah said, adding that with China opening up things should start getting better.

Gems and jewellery are one of the top four items exported from India, with a share of more than 10 per cent of the country’s overall exports. India exports diamonds, gold, silver, and platinum, as well as imitation jewellery. Merchandise export growth from India has seen less than five per cent growth in the last three months, after consistently clocking double-digit growth for over a year. The slowdown in export growth comes in the backdrop of lacklustre demand owing to the recessionary trends in the developed economies.

During April-September, barring cut and polished diamonds, all product categories witnessed a positive growth at–polished lab-grown diamonds (60.5 per cent), coloured gemstones (45.63 per cent), plain gold jewellery (19.53 per cent), studded gold jewellery (16.27 per cent), and silver jewellery (34.27 per cent). Cut polished diamonds saw a contraction of -1.27 per cent.

One of the prime reasons for the healthy growth of plain gold jewellery exports is due to the free trade agreement that was signed with the United Arab Emirates (UAE) and implemented in May.

DIVERSIFICATION OF EXPORT MARKET

Shah also stressed the need for diversification in the export market, especially at a time when demand from developed nations and India’s large export markets such as the United States (US) is facing a risk of recession and the Chinese market has just started opening up after the Covid-induced lockdown.

“Things should gradually settle with China opening up. A lot of dependency on any one market, such as the US is not healthy. As far as Europe is concerned, it is in very bad shape currently, with rising gas prices and recession looming. We would always prefer the China market opening up and some diversification in the far-east regions. This can help the industry,” he said.

In terms of diversification, far-east (Thailand, Hong Kong, Vietnam, Cambodia) and Middle Eastern markets should be looked into.

According to the data compiled by the Council, during April-September, exports to the USA, Hong Kong, Israel, UK  and Netherlands have recorded negative growths of -3.34 per cent, -8.25 per cent, - 6.43 per cent, -6.47 per cent and -10.43 per cent. Exports to other destinations such as U.A.E, Belgium, Thailand, Singapore, and Switzerland have shown a rise during the same period.

Exports of Gems and Jewellery
Months	FY22	FY23	Growth(%)
April	3.38	3.48	2.96
May	2.98	3.24	8.72
June	2.84	3.55	25
July	3.48	3.29	-5.46
August	3.45	3.34	-3.19
September	3.25	3.64	12
Apr-Sep	19.38	20.54	5.99

Source: GJEPC