Hong Kong’s latest virus surge and possible lockdowns have Indian jewellery exporters worried

KOLKATA: The fresh wave of coronavirus cases in Hong Kong has prompted the government there to think of stricter lockdown raising concern among Indian gems and jewellery exporters. Hong Kong is the nerve centre for the gem and jewellery business that caters to the Chinese and Far East markets.

“Exports will again get disturbed if lockdown is imposed by the Hong Kong government. We are seeing that orders from the region have slowed down after the new round of coronavirus cases surfaced,” said Vipul Shah, vice-chairman, Gem & Jewellery Export Promotion Council (GJEPC).

In the past two weeks Hong Kong has recorded more than 500 new cases, over 400 of them local.

“Major exports were happening to Hong Kong and China only in the current scenario. But if a lockdown is announced, it will majorly impact our exports,” said Mavji Patel, managing director of Kiran Gems, a leading diamond exporting firm.

Gem and jewellery exports have been declining from the beginning of the financial year 2019-2020, majorly attributed to various domestic as well as global challenges including rise in import duty on cut and polished diamonds and coloured gem stones, tightening of credit by banks, stringent customs inspection procedures, sluggish import demand and withdrawal of GSP benefit by US, among others.

The country’s gem and jewellery exports contracted by 34.72 per cent to $1.64 billion (around Rs 12,333 crore) due to a dip in global demand on account of the Covid-19 pandemic, according to GJEPC. Exports stood at $2.52 billion (around Rs 18,951 crore) in June last year.

Challenges for the sector have become graver after the outbreak of Covid-19 in China, which became a pandemic and stalled manufacturing and trading activities, cancellation of business events, deferment of committed order positions, reduced demand and elongation of receivables in the sector.

GJEPC’s Shah said Hong Kong and China together account for 30%-35% of India’s gem and jewellery exports. “Gem and jewellery is now going to the US also. But it is mostly B2B sales. Unless retail customers start buying, the demand will not pick up. Most of the jewellery and luxury stores still remain closed.”

In fact, a De Beers report published recently showed that more than 62% of the US consumers prefer to buy diamond jewellery at a physical store over buying online, as long as the environment is considered safe.

Courtesy: Economic Times