Diamond jewellery exports to Japan to stall for 6 months

Earthquake-hit Japan seems to have taken sheen off the Indian gems and jewellery exports. Units based in Surat are expected to be badly hit as diamond exports to the island country have come to a halt. India exports over $4-billion worth diamonds and jewellery to Japan annually.

The massive earthquake followed by a devastating tsunami scrambled the demand for precious stones amid panic and uncertainty about the recovery from what is described as the worst crisis since the World War II. Diamond traders see dismal prospects for exports at least for the next four-six months as priorities of citizens shift from luxury to necessity.

Also, Japan is one of the major buyers of a specific small variety of diamonds from India. These small precious stones are used in watches and accessories besides jewellery. According to industry estimates, of the total exports of small diamonds worldwide, nearly 25 per cent go to Japan.

“Exports of small diamonds, for which Japan has been a major buyer, will drop significantly due to the natural calamity. More than 50 per cent of the total diamond pieces polished in Surat are small pieces,” said Pravin Nanavati, member, Gujarat State Committee of GJEPC.

According to industry statistics, diamond exports to Japan have been rising steadily. In 2008, India's diamond exports to Japan were about 11 per cent of the diamond exports worldwide, while this year they increased to 15 per cent. The demand for diamond has also been rising in West Asia and Europe.

“Japan has not been a big market for India's diamond exports. But looking at the current situation, there would be 35 per cent decline in the diamond and jewellery exports to Japan this year. Since Japan is not a distribution point or transit point for diamond trading, there would be a minimal impact on the exports,” said Vasant Mehta, chairman, Gems and Jewellery Export Promotion Council (GJEPC).

“Though the area affected due to Tsunami was only northern part of Japan, but it has created a wave of panic across the country, hence there are very few prospects for any fresh orders coming in,” added Nanavati, who also exports diamond jewellery under the brand, She Jewellery.

The overall mood of the industry has been negative about the prospects of exports to Japan. “The exports to Japan will definitely get hit as there is hardly any demand in the current situation. Even though the country has a capacity to rise up again in a short span, there doesn't seem to be any possibility of exports at least for the next six months,” said Rohit Mehta, former president, Surat Diamond Association.