Gems and jewellery exports plummet in May due to trade war, money crunch

Tough customs scrutiny on rough diamond imports, US-China trade spat among other reasons for the decline

Gross exports of gems and jewellery declined sharply by 12.85 per cent to $3.17 billion in May 2019 from $3.64 billiion a year ago. This is one of the sharpest falls, and it comes at a time when the industry was hoping for some recovery and a softer approach towards funding on the part of banks.

Combined exports in April and May took a 9.11 per cent hot to $6.07 billion according to the data provided by the Gems and Jewellery Export Promotion Council (GJEPC). Cut and polished diamond exports in May fell 15.12 per cent to $1.88 billion, while the value of gold jewellery shipments fell 14.27 per cent to $1.03 billiion.

Explaining reasons for the fall, Colin Shah, Vice Chairman, GJEPC said, “Apart from high customs duty on polished diamonds, gold, and issues of ease of doing business in special economic zones, there were two other factors that led to the fall -- customs issues in Bharat Diamond Bourse and global economic uncertainty following the US-China trade war. The finance crunch in the Indian jewellery sector only made matters worse.”

The Customs Department had sought very fine details on import of rough diamonds, duw to which consignment lay uncleared for a few weeks. Importers have now reluctantly started clearing these stocks after providing the required details. Exporters were hoping for a relaxation in banks’ approach towards the industry in FY20, but that hope has been belied. Banks had tightened all financing to gem and jewellery sector a year ago, after the Nirav Modi-Gitanjali scam. “These factors will keep exports under pressure in near future,” said Shah.