Gem units shut on US slowdown

The slowdown in the US economy has cast a shadow on India's export dependent gems and jewellery sector.

Atleast five to six large standalone jewellery export units at SEEPZ, an industrial complex in suburban Mumbai, alone have shut while others are operating with reduced capacity.

HARD-PRESSED

China overtakes US as India's top jewellery importer. However, realisations from China are much lower than the US

Therefore, fall in US demand has compelled jewellery exporting companies to shut shop

At least six export units in SEEPZ, Mumbai, and a few in Surat, India's largest hub, have shutdown recentlyhub, have shutdown recently

The scenario in India's largest diamond hub - Surat - is not so different, too. While more than two dozen small and medium-sized diamond processing units in the same area have opted for an alternative business, a majority of them have cut volumes to a minimum and, thereby, retrenched their manpower strength.

Others have reduced their working hours in order to keep the processing equipment rolling. Industry executives are tightlipped on the matter as they fear further loss of business from domestic clients as well.

Recessionary trends and the stagnating purchasing power of consumers have adversely affected jewellery firms with extensive American operations. A jewellery exporter from SEEPZ, on the condition of anonymity, said: "Even large companies have not been able to withstand slowing US demand and atleast six units have closed."

The company, being a traditional diamond jewellery exporter to the US with a turnover of Rs 1,000 crore, has halved the number of working days despite exports to Europe, Japan and China.

"Our strength lies in Europe and, therefore, the US economic slowdown and weakening purchasing power of US consumers has not affected us to a great extent. However, closure of units in SEEPZ has intensified in the last two to three months because of high input costs and low remunerative orders," said another exporter.

India's exports to the US slumped to 26 per cent during 2007-08 from 35 per cent in the previous year even as the exports to Hong Kong jumped to 26 per cent from 15 per cent. However, the realisations in China are much lower than the US.

Sanjay Kothari, chairman, Gems and Jewellery Export Promotion Council (GJEPC), said: "The jewellery industry is seeing a job loss of 1,50,000-1,75,000 with many companies in SEEPZ operating for few hours."

Initially promoted as a uni-product export processing zone for electronic items, SEEPZ has attracted a large chunk of gems and jewellery units since the manufacture and export of jewellery was permitted in 1988.