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Hong Kong protests not all that dazzling for India's jewellery industry

India's gem & jewellery industry exports a third of its diamonds to Hong Kong

Rajesh Bhayani  |  Mumbai 

diamond

Pro-democracy protests in have upset the plans of India’s gem & jewellery industry, which exports a third of its diamonds to the Chinese-controlled city.

Exports had already fallen by 15.5 per cent to $4.9 billion in the first half of 2019 and the months-long unrest has proved another headache for an industry already suffering because of domestic issues like delay in goods and services tax (GST) refunds, scarce working capital and the US-China trade war.

Pro-democracy protesters swarmed parts of for a fourth day on Thursday, forcing schools to close and blocking highways as students built barricades and stockpiled makeshift weapons, setting the stage for campus showdowns.

Jewellery industry observers said exports might improve in two months, but they were downbeat about long-term prospects.

"Disturbances in are now hurting demand ahead of Chinese New Year, which is traditionally a big occasion similar to Christmas and Thanksgiving Day in the western world,” said Colin Shah, vice-chairman of the Gem and Jewellery Exports Promotion Council.

According to provisional data from the Gem & Jewellery Export Promotion Council, overall gross export of gems & jewellery declined by only 2.05 per cent to $3.46 billion in October 2019, compared with $3.5 billion in the same month a year earlier. In September, the decline was 6.24 per cent and in August the fall was 14.4 per cent.

In the first 7 months of 2019, gross exports of gold and jewellery fell 6.25 per cent to $22.42 billion, compared with 7.6 per cent in first six months. More importantly, the fall in export of cut and polished diamonds seems to have been somewhat arrested. The exports saw a decline of 24.86 per cent to $1.64 billion in August, and 17.8 per cent to $1.94 billion in September. In October, it was down 15.4 per cent to $1.95 billion, showing a marginal recovery.

Even if exports improve before Christmas, “the financial year exports could end with fall around 5-7 per cent in total exports. As of now, USA market has improved but the Hong Kong disturbances have hurt Chinese new Year (a month after Christmas) demand,” said the Council.

The domestic market had a huge unsold inventory of polished diamonds when the began, but there is good on that front. Following a fall in rough diamond prices last month, De Beers allowed their registered buyers known as Sightholders to dispose of diamond inventory before accepting quantities offered.

A DeBeers spokesperson said: “As part of its normal sales policy, the De Beers group enables sightholders to request that certain elements of rough diamond 'boxes' (the products we sell that contain a range of diamonds) are removed before the sightholder purchases the box. In recent sights, due to the challenges in the industry's midstream, De Beers Group adjusted the proportion of a box that could be removed before the box was purchased, although this was not 'unsold rough diamonds being sold back'. This is not a new process and has been in place for many years.”

Industry sources said that since domestic situation had improved now, the company would not offer this facility next month.

First Published: Thu, November 14 2019. 16:35 IST
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