India’s gems & jewellery sector has been experiencing troubles for consecutive second year due to economic slow-down and weak demand in the US, China and some European countries. We mentioned here last week that even festive and wedding seasons have not been able to boost domestic jewellery demand in India thanks to the volatile and high gold prices.
So is the case with India’s exports which have registered down-trend in successive 6th month of the fiscal year of 2015-16. The figures provided by India’s Gem & Jewellery Export Promotion Council (GJEPC) show that overall exports from the gem and jewellery sector during the first six months of 2015-16 stood at USD 19.22 billion, a decline of 5.59% over the USD 20.3 billion exported in the same period of 2014-15. The exports of cut and polished diamonds during this period came down by 13.81% to USD 10.42 billion this year from USD 12.09 billion last year, while the import of rough diamonds dwindled from USD 9.4 billion last year to USD 6.95 billion this year, showing a decline of 26%.
Gold jewellery exports were USD 3.81 billion for the first six months of the current financial year, down by 23.1% over the comparative figure of USD 4.96 billion in the same period last year, the figures show. Due to slow market conditions and strong rough diamond prices, the industry is facing sustained absence of real profitability in business. What is more note-worthy is that for the first time ever, the import of rough diamonds, the only raw material required for diamond manufacturing, has registered big decline of around 26% during first six months of 2015-16, in comparison to the same period last year.
The slow market conditions have also impacted India’s overall merchandise exports which, according to data provided by India’s Commerce Ministry, dropped by 24.33% in September to USD 21.84 billion while the imports came down by 25.42% to $32.32 billion year-on-year, resulting in a trade deficit of $10.47 billion. Cumulative exports during the first half of 2015-16 also shrank by 17.36% to stand at $132.93 billion as compared to $161.39 billion during the same period last fiscal, pulled down by bad export-performances of engineering products, petroleum products, gems and jewellery amid slowdown in the global demand.
Worried by such dismal export figures, the Government has increased allocations for export incentive schemes across the economy, including the diamond and jewelry sectors, in the current financial year to $3.2 billion (Rs. 21,000 crore).
Talking to the 27 members of the GJEPC recently in New Delhi, India’s Commerce Secretary Ms. Rita A. Teaotia said that the new amount was an increase on the earlier figure of $2.8 billion. She also said the Ministry would take appropriate measures to facilitate exporters and that export promotion councils’ suggestions would be taken into consideration.
Mr. Praveen Shankar Pandya, the newly elected Chairman of GJEPC, told the ministry it could combat the exports slowdown in the gem and jewelry sector through a long list of innovations including presumptive taxation for the diamond sector and free-trade agreements with countries with prohibitive rates of import duty.
Mr. Pandya, while addressing his first press conference immediately after being elected to the post recently has warned that the industry may register a 13% decline in exports this year if the government does not support the industry. The industry is passing through its worst phase and India is not just losing out on exports and its lead in the global market, unemployment rate in the country is swelling drastically as well.
The industry leaders here are expecting some more incentives soon to be declared by the Indian government.
Posted by Suresh Chotai
