India's gems and jewellery exports decline on a global economic slowdown

The fall in G&J shipment was largely driven by a sharp fall in exports of cut and polished diamonds

Gems and jewellery (G&J) exports declined in 2015-16 to the lowest in six years, due to a slowing global economy which reduced the demand for luxury goods. Data from the Gems & Jewellery Export Promotion Council (GJEPC) showed India's net G&J export at almost $32 billion (Rs 2.1 lakh crore), as compared to $36.2 bn the previous year, down 5.3 per cent in dollar terms and 11.7 per cent in rupees.

With an estimated employment of 3.5 million in this sector, both domestic and export, G&J claims to be the second largest employer in India, after the petrochemical.

“Demand for luxury goods, including G&J, has slowed globally. In response, Indian diamantaires cut their manufacturing activity proportionately, as evident from lower import of rough diamonds. For the first time since 2008, cut and polished diamond exports witnessed such a sharp decline of 13.7 per cent in value terms in FY16. In fact, a slight upward price adjustment in both rough and polished diamonds created a crisis of realisation,” said Praveen Shankar Pandya, chairman of GJEPC.

The fall in G&J shipment was largely driven by a sharp fall in export of cut and polished diamonds at almost $20 bn as against $23.2 bn in 2014-15 (a fall of 7.5 per cent). In rupee terms, however, the slump was 13.7 per cent to Rs 1.31 lakh crore, from Rs 1.41 lakh crore the previous year.

The decline was partly compensated by a sharp upsurge in export of gold medallions and coins, and silver jewellery. The former jumped 84 per cent to $5.2 bn (Rs 34,243 crore) and of silver jewellery by 44.2 per cent to almost $3 bn (Rs 19,407 crore) from $2.1 bn (Rs 12,569 crore) the previous year. Ironically, gold jewellery is available in every nook and corner but bullion was not available for making ornaments. Buying gold from the open market at such a high duty is not feasible for exporters to compete with players from other countries where gold is available duty-free,” said Pandya.

Ironically, gold jewellery is available in every nook and corner of the country but bullion was not available for making ornaments. Buying gold from the open market at such a high duty is not feasible for exporters to compete with players from other countries where gold is available duty-free,” said Pandya.

Ironically, Dubai and Thailand are emerging as a major manufacturing hub with lots of Indian businesses setting up units there, says the trade. “We therefore, urge the government to extend some incentives like interest subvention and MEIS (Merchandise Exports from India Scheme) to promote jewellery export. Since such facilities are already extended to some export oriented sectors, it should have no problem in extending the same to us,” said Russell Mehta, vice-chairman of GJEPC and promoter of Belgium–based diamond jewellery producer Rosy Blue.

India’s export of G&J are likely to remain under pressure in the current year, too, despite improvement in business sentiment from the world’s largest consumer, America, which takes nearly half of India’s diamond jewellery production.