India’s Jewelers Brace for Worst in 25 Years due to Coronavirus Scare

20 April 2020

India’s jewelers brace for the worst sales in jewelry items in 25 years amid coronavirus scare. As India is completely under lockdown to avoid spread of deadly Covid-19, jewelry industry is facing a tough time as stores of companies are closed across the country. According to Export Genius data and experts, jewelry purchases from India are estimated to plummet 30% in 2020 from the 690 tons last year. Let’s understand how the coronavirus has disrupted India’s jewelry industry from shipment data and trade statistics.      

India’s Jewelry Industry Impact Amid Coronavirus Outbreak

Following the coronavirus outbreak, India’s gems and jewelry industry has been affected severely as retailers in the country were managed to do only 20-25 per cent business in Feb due to fewer footfalls amid fear of the virus’ spread. Now stores are completely shut across the country due to 21-day lockdown. According to a report of All India Gem and Jewellery Domestic Council, there is a panic among people due to covid-19 pandemic and country’s lockdown.

Meanwhile, the number of novel coronavirus cases in India has crossed 1,000 mark and few deaths have been reported till now.

Factors Affecting India’s Jewelry Industry

The Coronavirus pandemic has affected almost every industry around the world. India’s gems and jewelry industry is also feeling the pain as it facing losses due to decline in customers. Here are few important factors that affect the jewelry industry in India:

                         1.     Lockdown Due to COVID-19

In order to combat the rapidly spreading coronavirus, India is under complete lockdown. This has plunged the sales of India’s jewelry to the lowest in a quarter of a century. Demand in the world’s second-biggest gold consumer has already tumbled, slammed by record high domestic prices and as the economy heads for the slowest pace of growth in 11 years. That pain is most likely to get deepen as the virus spooks buyers and jewelry stores to shutter their stores after Prime Minister Narendra Modi announced a 21-day lockdown across the country to control the spread of coronavirus.

                        2.     Tax Time

The other factor of jewelry industry is facing losses is that companies are doing a lot of tax related work including advance tax, GST and demonetization note to be submitted to the Income Tax Department.

                        3.     Muted Demand

The demand of jewelry has gone down sharply due to country’s lockdown due to coronavirus pandemic. Or we say that the demand is muted. A lot of people are scared from the virus and they are lockdown into their homes. Not only this, companies have shut their jewelry stores around the country. According to the Gem & Jewellery Export Promotion Council, the industry is seeking an extension for repayment of loans and a reduction in the import tax on gold to 4% from the current 12.5% to help jewelers.   

Surat Diamond Industry Stares at Rs 8,000 crore Losses

As per market experts, the Surat diamond industry is likely to face a loss of around Rs 8,000 crore in next two months as Hong Kong, which is a major export destination, has declared a state of emergency due to coronavirus outbreak in China. India export data shows that polished diamond worth around Rs 50,000 crore is exported from Surat to Hong Kong every year.

Experts believe that if the situation continues to remain the same, it will have a huge impact on the Surat diamond industry, which polishes 99% of all rough diamonds imported in the country.

China, from where coronavirus or Covid-19 originates last year, has claimed thousands lives and the disease has been spread in more than 150 countries. The United States, Italy, Spain and France are severely affected as death toll in these countries is in huge numbers. India is also facing growing numbers in coronavirus cases and deaths as well.

India’s Exports of Jewelry and Items in 2018

In gems and jewelry industry, India exports diamonds and articles the most to the world. According to India export statistics of jewelry, the country shipped diamonds worth US$ 25,637 million in 2018. Here is a list of jewelry items with their values, which India exported to global nations in 2018.

India’s Share in Global Jewelry Exports during 2018

In terms of global share in gems and jewelry industry, India holds second position, which is not very far from China, which is the top jewelry exporter country. According to India customs of jewelry, the country shared 12% value to total exports of jewelry, while China shared 12.9% value in 2018. See chart and table below to know the world’s top 10 exporter countries of gems and jewelry with their value in US$ million and value in US$ % recorded in 2018.

Concerns about the virus have been the local gem and jewelry industry to a halt with virtually no footfall in stores and many jewelers have shut their shops located in malls and shopping complexes. For instance, Titan Co., the nation’s biggest jeweler by market value, has shut store and manufacturers till further notice. Mumbai’s Zaveri Bazaar, the largest bullion market in the country is also closed. This could cut demand by as much as 40% in the coming weeks.