Exports of jewels and jewelry might reach a five-year low in FY 2024

Exports of jewels and jewelry might reach a five-year low in FY 2024

Nonetheless, January 2024 shows encouraging indications of revival, pointing to better times for the sector.

Exports of jewels and jewelry are predicted to drop to their lowest point in the previous five years, excepting the pandemic year.

India's second-largest source of export earnings this fiscal year, gem and jewelry exports, have decreased due to the weak diamond market. If the pandemic year doesn't occur, there are worries that gem and jewelry exports may reach a low point not seen in the previous five years.

Exports of diamonds and jewelry from April 2023 to January 2024, according to available ten-month statistics, decreased by more than 16 percent to $26.35 billion from the same period the previous year. Diamond shipments, which make up a significant portion of exports, fell sharply by 27.58 percent to $13.09 billion.

According to Vipul Shah, Chairman of the Gem and Jewelery Export Promotion Council, there is hope for the next quarter since there are indications of recovery in January 2024; nonetheless, total export numbers for 2023–2024 are predicted to drop by 15–20%. As.

"This decline is primarily as a result of lower demand seen in the first few months of 2023, which was a result of a downturn in the economy in both the US and China, key export markets," he said.

Gross gem and jewelry exports reached $2.39 billion in January 2024, down only 5% from the same month the previous year. Shah said that the US Christmas season's higher demand was the cause of the rebound.

We anticipate that going future, demand from China will increase, particularly in February during the New Year's festivities. These elements should keep export momentum going, which will improve the forecast for the final quarter.

Exports of jewelry and diamonds will be $37.74 billion in 2022–2023, a 4.6% decrease from the year before. Since 2018–19, when exports hit $39.72 billion, exports have stayed below $40 billion. In 2020–21, the Covid amount dropped to $25.51 billion.

In the case of gold jewelry exports, which have increased significantly over the last several months, the rebound is stronger. Exports of gold jewelry showed a little uptick through December of FY 2024, and then further improvement in January. From April to January, gold jewelry exports reached $9.265 billion, a 15.69% rise. According to Shah, "the Middle East market is doing well in terms of plain gold jewelry exports."

It's interesting to note that although imports of raw diamonds have declined, imports of cut and polished diamonds have climbed. Shah noted that this does not imply that the rate of diamond cutting in India has decreased.

India's diamond industry is diverse; many businesses have moved into vertically integrated sectors, such as producing jewelry with diamond accents for export. Importing stones from different cutting centers is a widespread practice for embellishing jewelry. This does not imply that India's diamond polishing industry is slowing off.

He said that the majority of lab-grown diamond (LGD) roughs are treated in India, necessitating the same abilities as cutting and polishing genuine diamonds, which is why Indian cutters and polishers are still in high demand.

Not only have natural diamonds suffered a fall in exports, but LGD, the next big thing in the diamond business, has also seen a decline. Despite starting from a lower foundation, LGD exports increased by more than 150% in FY2013. However, LGD has had difficulties this fiscal year, although beginning to show indications of improvement with a gain of more than 10% in January. Comparing April to January of this year, LGD exports decreased by 20.55 percent to $1.139 billion from the previous year.

Rates decreased as demand declined. However, the market is beginning to stabilize, and in the next fiscal year, LGD exports will increase. However, manufacturing in India has decreased by 20 to 25 percent as a result of low demand, according to Milan Ashwin Shah, director of Cupid Diamonds.

Shah believed that, at least among customers who are budget concerned, the initial desire for LGD has decreased. But natural diamonds and LGD will coexist. He predicted that a certain segment of the market would keep using and buying LGDs.

Customers interested in buying diamonds have found their way to LGD, which draws a sizable number of patrons. "LGD has already gained acceptance in the US, which accounts for around 60% of the export market, and several large corporations want to launch LGD goods. Though it has increased its market share in the tiny diamond segment, LGD will account for around 30 to 40 percent of the big diamond jewelry industry, according to Mahesh Mangukiya, president of Kalista Jewels and a member of the Surat Jewelery Manufacturers Association's core committee.

In India, too, acceptance of LGD is growing. Nationwide, there is a change in the demand for LGDs. They are now the focus of many businesses. We create a whole line of jewelry with LGDs up to 100 carats, says Smit Patel, a partner at GreenLab Diamonds.

The visual and chemical characteristics of LGDs are identical to those of natural diamonds, and they are more affordable and environmentally benign when produced in factories and labs. The Center eliminated the 5% import tariff on LGD seeds in the Union Budget 2023 and gave IIT (Joe) a five-year grant for LGD seed research.

"The government is offering bank loans, energy and technological subsidies, and other incentives to encourage the manufacture of LGDs. This will increase the nation's output of LGD, according to Mangukiya.

Shah thinks there will be a ton of potential for the diamond industry to grow both domestically and internationally in 2024–2025. According to him, the sector would gain a great deal from the government's policy initiatives, which include a massive shared facilities center at the Santa Cruz Electronics Export Processing Zone (SeePZ) and funding from a research project worth Rs 242 crore for laboratory-grown diamonds.

In addition, he believes that the planned bilateral trade agreements with Europe and the India-Middle East-Europe Economic Corridor would provide doors for expanding trade volumes and reaching new customers.

The diamond sector anticipates the establishment of a safe harbor regulation for the sale of raw diamonds in Special Notified Zones (SNZ), the decrease of diamond import licenses, and the introduction of diamond imprest permits for diamond imports in the entire budget, which is expected in July. Diamonds that are polished and cut now have a 2.5% import tax.