The export of gems and jewellery from Surat’s Special Economic Zone (SEZ) at Sachin experienced a significant drop in the past financial year, plummeting by half in value compared to 2022-23. This decline, from Rs 26,513.07 crore to Rs 12,765.44 crore, has been attributed to a decrease in demand driven by the Russia-Ukraine and Israel-Hamas wars, combined with stringent actions against gold smuggling by the Directorate of Revenue Intelligence (DRI).

In the 2020-21 financial year, the exports were worth Rs 16,161.65 crore, contributing to the overall exports of Rs 17,845.55 crore recorded by the SEZ. The Surat SEZ, which boasts 121 operational units, is a key hub for the export of gems and jewellery, with 80 units dedicated to the manufacturing of diamonds, gems, and jewellery products.

Factors Behind the Decline
Veteran diamond manufacturer and former Gujarat Region chairman of the Gems and Jewellery Export Promotion Council (GJEPC), Dinesh Navadiya, identified several major reasons for the sharp decline in exports. "The Russia-Ukraine and Israel-Hamas wars, inflation in the US, which is a major consumer, and China's ongoing struggle to recover from the Covid-19 impact have all contributed to the reduced demand. Additionally, strict actions taken by the DRI and other agencies against firms in the SEZ for providing fake export figures while selling goods in the domestic market have significantly impacted exports," Navadiya explained.

Over the past four years, the Surat DRI has booked seven units in connection with these activities. Notably, in March and April of this year alone, the DRI lodged 16 cases of gold smuggling across the country, including one in Ahmedabad.

Industry Insights
Vijay Mangukiya, Chairman of GJEPC (Gujarat Region), echoed these sentiments, stating, "The primary reason behind the decline in exports in the diamond, gems, and jewellery segment is the lack of major demand in the international market. Ongoing wars and sanctions imposed by G7 nations on Russian diamonds have exacerbated the situation."

He further noted, "The Indian market consumes over 35 percent of rough diamonds imported from Russia's Alrosa diamond company. Due to the ban on Russian diamonds, there is now a shortage of rough diamonds in the Indian market, and even the prices of lab-grown diamonds have dropped."

Overall, production in the diamond, gems, and jewellery sectors has decreased by 30 percent. According to data from the Surat SEZ, while the pharma and chemical segments have seen a rise in exports since 2020-21, there have been declines in the textile and garment, plastic and rubber, and software and services segments. On a positive note, the medical equipment and device segment, along with engineering products, has seen a rise in exports. Conversely, the export of tobacco products has declined.

The Kamakhya Gold Outlook 2024 highlighted the numerous challenges faced by the gems and jewellery sector in Surat’s SEZ, emphasizing the impact of global conflicts, economic factors, and regulatory crackdowns. As the industry navigates these turbulent times, the insights and strategies discussed at the event will be crucial for guiding future trends and sustaining growth in this pivotal sector.