By Krishna Barot | Mukesh Jagota
Being at once import-intensive and export-oriented, the gems and jewellery industry can withstand the current fall of the rupee, but have serious concerns about the continued sluggishness in demand from key export markets. In the major industry clusters, capacity utilisation has plummeted to abysmally low levels.
The depreciation of the rupee will not add to the topline or bottomline of the gems and jewellery exporters, as over 95% of inputs are imported. In the domestic market, however, prices of precious metals and stones will increase, which may be lucrative for the units.
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In April-November, exports of the gems and jewellery sector, which have employment potential of 5 million in times of brisk business, fell 10.1% to $19.2 billion.
Vipul Shah, chairman of Gems and Jewellery Export Promotion Council, said: “We are hoping that 2025 may bring improved prospects for the sector as polished diamond prices have stabilised and showing some signs of recovery. However, the demand is still subdued in the key export markets, with buyers focusing more on jewellery.”
The US and European markets for jewellery are holding up and there has been a return of demand in West Asia, he noted.
The demand in east Asia, however, has been tepid. With the stimulus that China is about to unveil, demand from the neighbouring country is expected to grow strongly as it is low on inventory. An easing of geopolitical risks with the hopes of a resolution to the Russia-Ukraine conflict are what Indian gems and jewellery exporters pin hopes on.
Gross exports of cut & polished diamonds in November 2024 amounted to $666 million – a decline of 39.8% in comparison to the year-ago month. “In response to this, many diamond companies are cutting down production and there are still several factories that haven’t been operating at full capacity since Diwali,” Shah said.
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