With
demand slow for diamonds and diamond jewelry, the Indian gem and jewelry
industry has not had much to celebrate in 2017. The major issues the trade
faced were the introduction of the goods and services tax (GST) in July and the
aftereffects of the government’s demonetization policy, which particularly hit
smaller retailers who trade in cash.
“The diamond industry was
struggling for survival,” an industry player told
Rapaport Magazine, speaking
on condition of anonymity. “Customers today are not willing to spend on
jewelry, and if necessary, their purchase is often restricted to buying gold
jewelry, keeping in mind the investment value it holds. Post-demonetization,
jewelry retail was at a low, and just when we were slowly getting back on
track, the issue of GST has brought us back to a similar phase.”
Understanding
GST
Rajiv
Jain, chairman of the International Colored Gemstone Association (ICA) Congress
2017 and a former chairman of the Gem & Jewellery Export Promotion Council
(GJEPC) explained that consumers preferred to spend money on luxury goods and
vacations rather than jewelry. “The industry, too, has faced issues
understanding the new GST laws,” he continued. “But once we understand the new
laws, 2018 should be good for us. Not that we will witness a dramatic change,
but we are optimistic of having a better 2018 as compared to what the industry
faced in 2017.”
While there is demand for
cheaper and extremely high-end stones, Jain added, the middle segment has been
slow.
Flat
forecast
According
to the GJEPC, gem and jewelry exports are likely to remain flat in the 2017-18
financial year, which began in April. While overseas shipments fell in the
first half of fiscal 2018, an improvement is likely in the second half.
“We saw a decline of 10% in
overall gem and jewelry exports in the first six months of this financial year,
mainly on account of economic slowdown in the overseas market, the introduction
of VAT in Dubai, and implementation of GST in July,” GJEPC chairman
Praveenshankar Pandya told the Press Trust of India news agency.
At the India Gold &
Jewellery Summit at Vigyan Bhavan in Delhi on December 1 and 2, the GJEPC
brought together the industry’s stakeholders to define a clear gold policy
framework to promote transparency and boost jewelry manufacturing. One of the
outcomes was a target of $25 billion in jewelry exports by 2022.
Colored
gemstones get a boost
In
October, for the first time in 14 years, Jaipur hosted the four-day
International Colored Gemstone Association (ICA) Congress. More than 300
delegates from around the world attended the conclave, which included a series
of seminars that focused on the market’s dynamics and challenges.
“The current market
sentiments are low across all categories, and this applies to colored gemstones
as well,” Jain said. “Demand is low not only within India, but internationally
as well. Innovation is the key to moving forward. The current trend is to
innovate with the product design and offer customers jewelry that has a higher
perceived value.”
He added that it was “a
matter of pride that [Jaipur] got a chance to host the ICA Congress. There were
factory visits organized where key international delegates applauded the
world-class factories that have been set up in Jaipur for cutting and polishing
colored gemstones.” The congress gave global exposure to factories involved in
producing colored gemstones, he stressed, saying this would eventually lead to
international orders.
Article from the Rapaport Magazine - December 2017. To subscribe click here.