“Demand is picking up in the world markets. We are expecting a robust demand in the second and third quarters of 2018-19,” said Colin Shah, vice chairman, Gem & Jewellery Export Promotion Council. “The growth in these two quarters should be 5-10 per cent higher than in the corresponding period of the previous year.”
However, Shah said, the growth will also depend on some macroeconomic factors such as oil prices, rupee depreciation, interest rates and economic growth in the run-up to the 2019 Lok Sabha election. “All these factors can affect the Indian manufacturing sector. Despite all these, exports will grow in the second and third quarters,” he said.
In 2017-18, exports of gems and jewellery from India fell 11.29 per cent from a year ago to Rs 2,10,869.36 crore. In April, the first month of the current fiscal, exports fell another 20.59 per cent to Rs 16,983.46 crore. “There is no cause to worry. This is normal. Exports are now steady and the real pickup will happen from July,” said Shah.
There is good demand from markets across the world, including from the United States for large diamonds, said Vipul Shah, a leading diamond exporter.
Weaker rupee is also providing a fillip to exports although, analysts said, prices of polished diamonds have not gone up in tandem with prices of rough diamonds. “There will be pressure on the margins of manufacturers if polished diamond prices do not go up,” said Anirudha Lidbide, a Surat-based diamond trade analyst.
“Manufacturers in Surat are cautious now. They are not ready to build an inventory as they are uncertain what new guidelines banks will come up with for lending to the gems and jewellery sector.
Banks have asked diamantaires to become more transparent while dealing with them.” Domestic consumption of diamonds remains muted even as exports are looking up. “High gold prices have affected the consumption of gems and jewellery in the country. This has also impacted diamond consumption,” said another analyst, who did not wish to be identified.