The downgrading of US credit rating will have some impact on India’s jewellery exports in the short term. Industry leaders, however, say that India’s overall jewellery exports to the West in general and the US in particular is unlikely to be affected in the long term.
“It is very early to say about the impact of this downgrading on overall jewellery exports. However, there could be some impact in the short term,” said Rajiv Jain, chairman of Gems & Jewellery Exports Promotion Council (GJEPC).
“We expect about 16 per cent growth in exports in 2011-12, as there is an increase in the number of orders from markets like the UAE, Bangkok, Latin America and Hong Kong,” Jain added.
The base has widened. GJEPC has forecast overall jewellery exports to surpass $50 billion this year, significant as the sector contributes around 13 per cent to India’s merchandise exports.
In the previous economic downturn three years ago, India’s jewellery exports to the US had declined 35 per cent. The industry had lost nearly a third of its skilled manpower, which have not yet came back despite the turnaround in the industry.
“In the last economic recession in August 2008, the pipeline inventory was full. US buyers were content with the existing inventory, as they were expecting a slump in the jewellery demand. They cancelled existing orders and placed no new order for over three months until the economic recession ended,” said Shreyas Doshi, chairman, Shrenuj & Company Ltd, one of India’s largest exporters.
“This time, the scenario is totally different. The pipeline is empty. Besides the expected robust demand on the occasions of Christmas and the New Year, existing customers are purchasing jewellery items in a big way. Our orders are full. Indian exporters are, on Tuesday, unable to supply jewellery and diamond to meet the global demand,” Doshi added.
Indian jewellers have reduced their dependence on the West for jewellery exports by widening horizon to the major potential Asian markets like China, Hong Kong and Bangkok.