New Delhi: The rise in India’s export of gems and jewellery over the last seven months is a rebound from the slump induced by Covid-19 in 2020, with businesses still working to reach pre-pandemic levels, experts and industry players have told ThePrint.
Gold jewellery, however, continues to see a decline in export due to “sluggishness” in markets such as the Gulf.
Last week, Commerce and Industry Minister Piyush Goyal had said that export of gems and jewellery doubled in the first seven months of the financial year 2021-2022, compared to the same period last year. From April to October 2021, gems and jewellery exports were worth $23.62 billion, compared to $11.69 billion for the same period in 2020 — a 102.09 per cent rise. In the corresponding period of 2019, the figure was $22.06 billion, according to commerce ministry data.
“We are mainly seeing a recovery from the Covid slump,” said Colin Shah, chairman of the Gem and Jewellery Export Promotion Council of India (GJEPC), a body under the Indian government that promotes the industry and its products. “There is also excess liquidity across the world because of all the fiscal stimulus given by central banks everywhere. The jewellery market has benefited from a share of this.”
Bharat Malpani, founder of Jaipur-based BK Exports, which sells to the US, Australia, Europe and Japan, said: “We have seen a major uptick in revenue in the last seven months compared to the low base in 2020 during Covid. But if we take a base of 2019 or 2018, then we are just shy of these levels. Gold jewellery, especially, has taken a hit.”
Shah expects gems and jewellery exports to touch approximately $41 billion by the end of this financial year.
Barring 2020, the value of Indian gems and jewellery exports has hovered around an annual figure of $35-40 billion over the past four years. They stood at approximately $40.9 billion in 2017-18, $39.7 billion in 2018-19, $35.5 billion in 2019-20 and $25.6 billion in 2020-21, according to data from the GJEPC website.
The US remains one of the biggest importers of Indian gems and jewellery, and is also a steadily growing market for Indian diamonds.
Decline in gold jewellery exports
Last week, Goyal had said the superior quality of Indian manufacturers has “enabled us to penetrate markets like Dubai-UAE, USA, Russia, Singapore, Hong Kong and Latin America”.
The US continues to be a major destination for India’s gems and jewellery exports — accounting for 45.7 per cent as of September 2021.
In July 2020, Washington had ended preferential trade treatment to Hong Kong and hiked import duty to 7.5 per cent from 3.3 per cent on gems and jewellery. At the time, the GJEPC had said that Indian manufacturers will benefit from this, considering that China and Hong Kong are the fourth largest importing destinations for gems and jewellery for the US, after India, France and Italy.
US aside, there has been “sluggishness” in other export destinations for India’s gems and jewellery products. According to experts, slow recovery of markets like the Gulf has adversely affected gold jewellery exports.
“The main market for gold used to be the Gulf. Though it’s recovering now, the last 12 months have been quite sluggish over there because of the pandemic, oil-related issues, etc. We’re hoping 2022 will be better than 2021,” said Colin Shah.
Gold jewellery exports have declined by over 32 per cent from April-September to $3.9 billion as compared to $5.8 billion for the same period in 2019. Plain gold jewellery in particular fell to $858 million, a drop of over 70 per cent, between April and June this year, compared to $2.9 billion in the same period in 2019.
Ricki Garg, director of Delhi-based Jisha Jewels, which sells gold and diamond jewellery to Europe and the US, said stiff competition from Chinese products may have a role to play in this.
“Right now, India is importing gold from China and Hong Kong because their product quality is very good compared to Indian manufacturers. We are lagging behind in terms of the technology to make high quality products in India,” Garg said.
Meanwhile, silver exports have been performing well, surging nearly 140 per cent in April-September 2021 compared to the same period in 2019.
Surat’s diamond industry turns to new technology
Cut and polished diamonds are critical to India’s gem and jewellery export basket, accounting for nearly 65 per cent of exports in 2020-21.
After reaching a historic low in February 2020, the category saw an uptick in the final quarter of 2020-21, resulting in a full-year decline of 12 per cent. In the April-August period this year, the export of cut and polished diamond grew over 33 per cent to $10.5 billion as compared to $8.3 billion for the same period in 2019.
Although it struggled during the pandemic, the famed diamond industry in Gujarat’s Surat continues to be the world’s largest hub for cutting and polishing the stones.
According to Jayanti Savaliya, president of Surat Jewellery Manufacturers Association (SJMA), international demand for diamonds from India is increasing due to three factors — growing demand in the US, American importers turning from China to India, and places like Surat turning to new technology to produce lab-grown diamonds.
Lab-grown diamonds are created by using cutting-edge technology that replicates the natural diamond growing process. They share similar carbon-based chemical makeup as mined diamonds and are not considered fakes.
“Surat factories are now being equipped with more and more machines for manufacturing lab-grown diamonds. So now there is growth for raw material, over and above polishing and processing abilities. This is sure to cause a two to three-fold rise in exports in the near future,” Savaliya said, adding that earlier, factories used to import lab-grown diamonds from countries like China.
(Edited by Gitanjali Das)