Rapaport Magazine


By Zainab Morbiwala
Mixed Signals as Market Gyrates

The gems and jewelry industry in India is on a roller-coaster ride. One month there is a positive ray of hope and then the next produces negative signals of a slowdown in the industry. Not that the industry was in the best state, but current market dynamics signal low sentiments across the board. With the India International Jewellery Show (IIJS) just two months away, the hope is for a positive momentum to catch on.

Market Dynamics
   As Dinesh Lakhani, director, Kiran Gems Pvt. Ltd., sees it, “The market is in its usual phase, as it always is during this time of the year. The summer holiday is setting in so it is a normally quiet month. At Kiran Gems, we feel the demand is better as compared to year-on-year sales in 2015; however, it is slower compared to the momentum of the previous months.”
   Lakhani’s view on the market dynamics resonates with industry expectations. During the summer season in India, jewelry is not on customers’ shopping lists, especially given the money being spent on vacations. But the slowdown cannot entirely be attributed to the ongoing holiday season.
   According to Rajiv Jain, director, Sambhav Gems and former chairman, Gem and Jewellery Export Promotion Council (GJEPC), the conditions in the industry have seen no signs of improvement for almost a year and a half. He elaborates, “Things are not in good shape as compared to last year — which was not good either — but 2016 has been slow. Surprisingly, this year, however, there is a trend where both the international and domestic markets are underperforming. Usually when the international market is slow, we do see the domestic market showing a positive response and vice versa. But not this year. I would attribute the slowdown to market conditions in China, Europe and Russia, where the overall economy is not picking up and therefore, the demand for diamonds is low. Demand from the U.S. is good, but that does not make up for the slowdown in the other markets. Overall, sentiments across the board are low, very low.”
   Jain is a veteran in the colored gemstone market and during his tenure as the chairman of the council, he was known for taking an active role in highlighting India’s position in the cutting and polishing of colored gemstones. Commenting on the dynamics of them today, he minces no words when he says, “The colored gemstones industry is suffering as well. Emeralds are fine. High-end rubies are also doing well, although the rest of the stones are not performing as well as before. Even a stone like Tanzanite, which is a very popular stone, is not selling. Morganite was performing well but it has also seen a slowdown in the past three months. We faced government restrictions as well for Morganite that lasted for two months. This made us miss the opportunity to display them for the Hong Kong show. The issue is resolved but we have missed the train.”

New Initiatives at the IIJS
   Recognizing that designer jewelry is gaining momentum in India, GJEPC this year will have a separate section at IIJS 2016 showcasing designer jewelry.
   As shared in a press statement, IIJS 2016 will introduce a “Hall of Innovation” product gallery that is intended to empower budding designers, start-ups, women entrepreneurs, skilled goldsmiths and small entrepreneurs by providing an opportunity to market their skilled craftsmanship to more than 35,000-plus trade visitors. In its bid to encourage participation for the expanded sections of the industry, the “GJEPC Membership mandatory” clause for participation at “Hall of Innovation” has been relaxed. Another noteworthy initiative is a dedicated section for the micro, small and medium enterprise (MSME) sector. Praveenshankar Pandya, GJEPC chairman, said, “An additional inclusion is the Special Clusters in the form of a prefabricated gallery where preference will be given to the MSME sector. This initiative will be in line with the recent government initiatives to boost this particular sector and with a view to introduce new micro, small and medium companies in the show and present them with a parallel business opportunity.”

Exports Paint Negative Picture
   While the beginning of 2016 had seen the industry upbeat about growth for the year, the figures disclosed by GJEPC for fiscal year (FY) 2016, covering April 2015 to March 2016, do not paint a happy picture. In FY 2016, India’s exports of gems and jewelry dropped 3.46 percent to $38.6 billion as compared to $39.98 billion in FY15. Gross exports of cut and polished diamonds dropped 13.66 percent to almost $20 billion as compared to $23.16 billion in FY15. Exports of colored gemstones dropped 4.43 percent to $433.18 million as compared to $453.25 million in FY15.

Article from the Rapaport Magazine - June 2016. To subscribe click here.

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