Diamond and gold jewellery exporters are witnessing a gradual improvement in shipments with the reopening of global markets and expect the recovery to become steep in the last quarter of fiscal 2021.
They are hoping that a Covid-19 vaccine would become available in the market by December, which would boost the recovery of demand.
However, amid this, the souring of relationship between China and India on border issues continues to be a matter of concern to the gem and jewellery exporters, even though they have started looking at newer markets like Vietnam and Thailand to export their products. As much as 30-35% of India’s diamond exports are to China.
“We can see the initial signs of a recovery in the US and China markets. Even Europe is also showing green shoots of recovery,” Gem & Jewellery Export Promotion Council vice-chairman Vipul Shah confirmed. However, the worry is that if the relations between India and China sours, then Indian markets are apprehensive that it may have an impact on the diamond exports to China. Keeping that in mind, many exporters are looking at other Far East nations for exporting their products.
A Covid-19 vaccine is expected to be launched by this year end, he said. “If that happens, then international travel will be back to normal and trade will further improve. So, we are expecting a V-shaped recovery in the January-March quarter of FY21,” Shah explained.
Exports of gem and jewellery declined 50.36% to $4.11 billion during the April-July period of FY21. The worry of the exporters about China arises following the Galwan clash, after which India has been working on policies to scrutinise and stymie the influx of Chinese goods into the country. Traders are worried about the possibility of China taking similar measures. However, there is a silver lining for Indian exporters.
Recently, through an executive order, US President Donald Trump ended that country’s preferential economic treaty with Hong Kong. The US is likely to impose a 7.5% duty on imports from Hong Kong, compared with 3.3% earlier. Hong Kong is the top global hub in Asia for gems & jewellery and China was using this preferential duty structure in Hong Kong to re-export many products.
If the higher duty is imposed, then India may become a major sourcing hub for the US, exporters said. Those diamond manufacturers, who have offices in Hong Kong and China are witnessing demand gradually picking up in the region.