Gems and jewellery export slips 19% in Dec on weak demand

Exports of gems and jewellery slipped around 19% in December as weak consumer sentiments in the West disrupted trade in an otherwise healthy month for the sector, Gem and Jewellery Export Promotion Council (GJEPC) said.

The council warned that Ukraine-Russia conflict which has entered its 11th month has begun to hit cut and polished diamond exports as rough diamond imports from Russia plunged 40% in six months from March 2022. Russia is the largest producer of rough diamonds.

The commerce and industry ministry is expected to release the trade number for December next week.

Colin Shah, managing director, Kama Jewelry said December is traditionally a high export month for gems and jewellery, but there was a dip last month due to high gold prices, lockdowns in China and rising inflation globally.

“The overall exports of gem & jewellery during April-December 2022 show positive trend but December export figures reflect the global headwinds faced by the gem & jewellery industry in terms of inflation and talk of downturn in US,” Vipul Shah, Chairman, GJEPC said.

In December, the overall gem and jewellery exports declined to $2.3 billion compared to $2.9 billion in the previous year. During April-December, however, exports dipped 0.73% to $ 28.6 billion compared to $28.8 billion for the same period last year.

“The diminishing imports in the first 6 months of this fiscal year has resulted in overall decline in Cut Polished Diamonds (CPD) and overall gem & Jewellery exports in the month of December . The zero covid policy and the recent withdrawal of the same have also negatively affected the consumer demand of diamond jewellery in China,” the council said.

The council added that the commissioning of India-UAE CEPA has resulted in exponential growth in exports of plain gold jewellery to make up for the gap in exports to key markets such as the US and Hong Kong. The commerce and industry ministry is negotiating FTAs with UK and EU that could boost exports further.

“Given that the exports of traditional gems and jewellery products such as heavy handcrafted gold jewellery is growing marginally whereas imports of raw materials are rising, there are concerns related to negative trade balance of trade in the SEZs. After removal of net foreign exchange (NFE) criteria for giving incentives, trade balance may need a thorough review,” an Indian Council for Research on International Economic Relations (ICRIER) report said.