There has been a sharp decline in orders from Japan and Europe this year for India’s gems and jewellery.
Data compiled by the Gems and Jewellery Export Promotion Council (GJEPC) says G&J net export declined 7.4 per cent to $16.8 billion in April-September, the first six months of this financial year, from $18.2 bn in the comparable period last year. The decline in rupee terms was 10.9 per cent, at Rs 1.08 lakh crore.
The segment contributes nearly 13 per cent of India’s overall merchandise exports.
Exporters attribute the fall to a slowdown in production ahead of the goods and services tax (GST) implementation on July 1 and frequent changes in the government’s gold policy, which hit bullion import, affecting the availability of the metal for exporters.
“As of now, overseas orders for the ensuing Christmas season, New Year and Mother’s Day are also lower. For exports to remain stable for the entire year, G&J shipments have to recover fully in the second half,” said Praveen Shankar Pandya, chairman, GJEPC.
After a record $43.4 billion in 2010-11, India’s G&J export declined to $32.6 billion in 2015-16, before recovering to $35.5 billion in 2016-17.
Production activity at manufacturing units had halted nearly two weeks ahead of GST implementation. The government also levied 0.25 per cent GST on rough diamonds, upsetting exporters’ plans. These stones are fully imported. G&J exports also took a hit with five per cent import duty imposed by the UAE government early this year. Most Indian jewellery exporters have offices in the UAE for re-routing ornaments to Europe, West Asia and Africa, after mere value addition or re-packing there.
A big worry, say industry experts, is that the profitability in diamond processing and jewellery export has gone down in recent years, due to a sharp hike in interest rates on working capital. That apart, GST blocked a significant portion of working capital, including receivables, which mature in 90-180 days.
“We are working with the ministries concerned to enable policies to make this industry profitable. We hope they will resolve exporters’ difficulties one by one, to bring G&J export back on growth,” said Pandya.