Budget 2020: Diamond exporters want relief as export slump continues

Data from the Gem and Jewellery Export Promotion Council shows a 1.9 per cent fall in the country’s gross shipment last month, from a year before, to $2,435.9 million (Rs 17,300 crore).

That brings the overall fall in the current financial year’s first nine months to 5.3 per cent in the segment, to $27.7 billion (nearly Rs 2 trillion). The sector says this will be another dismal year for export.  

Colin Shah, vice-chairman at the Council, says they hope the central government is noting this fall in a sector which generates and sustains a large number of jobs. “With the Union Budget round the corner, we hope the government will give us some respite on our long-standing requests for duty reduction on gold, platinum and diamonds. Also, ease of doing business on Customs issues, resolution on GST (goods and servis tax) input credit and a progressive SEZ (Special Economic Zones) policy.”

Apart from a working capital crunch over the past two years, from a sharp cutback in bank lending, the trade says Customs notifications ealier this year have caused much hardship for units. The industry has not been able to benefit from the US-China trade war — many exporters were willing to shift their base from China to India but feportedly found India’s SEZ policies not suitable. 

A recent report from Bain and Co recognises that diamond polishing units face insufficient bank funding, high inventory and low demand. It estimates sales of rough diamonds to fall by 25 per cent in 2019, while production remains stable. To reduce inventory, major producers are cutting prices and offering more flexible purchasing terms. 

In December, export of cut and polished diamonds was 4.5 per cent down, to $1.25 bn; the fall over the nine months from April 1 was 17.9 per cent, to $14.7 billion. Coloured gemstone export from April to December was down 9.9 per cent to $247.5 million. 

Silver jewellery, however, has compensated, with export up 75.36 per cent in these nine months, to $1.02 bn. Gold jewellery export also rose, by 4.9 per cent in those nine months, to $9.3 bn.