Jewellery exportsfrom India is likely to fall by 12-15 per cent in the near term.
Demand from the European Union (EU), West Asia and Hong Kong, among other places constituting 55 per cent of the market, continues to be tepid. Industry officials say it would take 18 to 24 months for export to see growth.
According to data from the Gems and Jewellery Export Promotion Council (GJEPC), exports during April-November (first eight months of this financial year) fell 8.2 per cent to Rs 1.45 trillion ($22.6 billion), against Rs 1.58 trillion ($24.6 bn) in the same period a year before.
Apart from the demand problem in the key regions, a five per cent value added tax has been recently imposed by West Asia countries for such exports (regional governments need more revenue, with the earlier slump in oil prices). This would mean more downward pressure on sales, says Praveen S Pandya, chairman of GJEPC. Shankaar Sen, managing director at Senco Gold and Diamonds, which exports to America, Britain Singapore and West Asia, says the decline to the UAE and others in that zone would be at least 20 per cent in 2018.
Economic growth in the euro zone is projected to ease to 1.9 per cent in 2019, says the OECD grouping. The outlook for West Asian and North African countries, says the International Monetary Fund, remains relatively subdued due to continued adjustment for low oil prices and regional conflicts. Senco Gold and Diamonds used to earn around 20 per cent of its revenue from export; this is now eight per cent, it says, and could decline more.
Exports of gold jewellery from the Domestic Tariff Area during April-November fell by close to six per cent, at Rs 147.3 billion. Exports of gold coins and medallions took a hit of a 51.7 per cent, to Rs 111.7 billion.
The total jewellery export market is pegged at $43 billion, of which $7 billion is gold export (43 per cent to the UAE).
“However, the USA is faring better and there is growth in this market. In the near term, this country is expected to drive the export demand,” Pandya said. However, demand here is for 14-18 carat jewellery, not so rewarding.
“It is the MEA (Middle East) and Southeast Asian region, which drive demand for higher carat gold. The US is mostly catered to by those in Special Economic Zones and Export Promotion Zones,” said Sen.
However, Suvro Chandra, joint managing director at PC Chandra Jewellers, says lack of clarity on Goods and Services Tax refund is also affecting export. “Working capital gets stuck, which impacts export volume,” he explained.
India is the world’s largest cutting and polishing centre for diamonds; 75 per cent of all polished diamonds come via this country.