Israel-Hamas war has Indian gems, jewellery exporters worried

New Delhi: The Gem & Jewellery Export Promotion Council (GJEPC) on Monday voiced concerns about the escalating Israel-Hamas conflict, highlighting that India's gem and jewellery exports to Israel exceeded $1.2 billion in the previous fiscal year. 

India, responsible for cutting and polishing 90% of rough diamonds globally, and employing around two million people, has been facing an unprecedented crisis due to plummeting demand, prompting trade bodies to ask members to halt imports of rough stones for two months. 

Israel witnessed a surprise and unprecedented attack by Hamas, which rules the Gaza Strip, in its southern parts on Saturday morning.

In the current financial year so far, exports have seen a decline of 30.27% year-on-year, marking the steepest drop in at least half a decade. Notably, demand from pivotal markets like China and the US has nosedived.

“India has witnessed substantial exports of gem and jewellery to Israel, amounting to $1279.76 million during the 2022-23 fiscal year. It is significant to note that Israel, being a very important trading center, also exports rough diamonds to the tune of $1782.80 million,” said Vipul Shah, chairman, GJEPC.

Shah emphasized Israel's role as a primary re-export market, and described the ongoing conflict as "grave." He added that a conclusive assessment of the impact remains premature, and “We have not witnessed any disruption in the regular dealings (so far).”

While demand typically surges preceding festival season, this year appears to be an exception, Mint had reported.

India sources rough diamonds from the likes of De Beers, Rio Tinto, and Russia's Alrosa. These diamonds are processed at the Surat Diamond Bourse after arriving through the Bharat Diamond Bourse (BDB). Following this, polished diamonds are directed back to the BDB for export, primarily to the US, Hong Kong, and Belgium.

Industry bodies, including GJEPC, BDB, and Surat Diamond Bourse, have advocated for a pause in rough diamond imports from mid-October to mid-December by their affiliates.

Previous instances of such import interruptions coincided with Saudi Arabia’s oil embargo in 1973, the 1992 balance of payments crisis in India, and the 2008 global financial crisis.

In FY23, India's merchandise exports and imports with Israel were valued at $8.4 billion and $2.3 billion, respectively, culminating in a $6.1 billion trade surplus. Key exports include diesel ($5.5 billion) and refined diamonds ($1.2 billion), while primary imports encompass rough diamonds ($519 million) and polished diamonds ($220 million), among other products.