Indian diamond exporters looking beyond China amid increasing border tensions

India’s diamond exporters are growing wary of the Chinese market owing to the rising tension between the two countries over the border issue and the move by Chinese authorities to carry out raids at Indian diamond facilities following the recent arrest of a local couple on the charge of smuggling diamonds.

China and Hong Kong are the major markets for Indian diamonds, accounting for 30% of India’s diamond exports.

Exporters have started looking at new markets such as Vietnam, Cambodia, Indonesia, Taiwan and Thailand to export diamonds, said industry executives.

They said in order to evade customs duty of 4%, diamonds are often smuggled from Hong Kong to mainland China which is a hub of manufacturing of diamond-studded jewellery.

“The escalation of tension between India and China is a matter of concern to the exporting community,” Vipul Shah, managing director of diamond exporting firm Asian Star, told ET. “We are also getting information about raids in China. All these factors are creating an air of uncertainty among the diamond trade. We are looking at newer Far Eastern markets to boost our sales.”

Besides, diamond traders are uncertain about the Chinese market ahead of the US presidential election as they feel US President Donald Trump might take some tough stance against China as part of his election agenda.

India’s diamond trade witnessed a revival in Chinese demand in July and August. “Since China had lifted lockdown much earlier, the demand for diamond went up,” said Mavji Patel, managing director of Kiran Gems, a leading diamond exporter.

However, Patel too said that if the tension between India and China escalates it will have an impact on diamond exports. He also said that since international exhibitions and shows are not taking place, it is becoming difficult to showcase products. “Sales are happening online. In gems and jewellery trade it is important that buyers see the products physically before placing orders,” he said.

Meanwhile, gems and jewellery exports are projected to fall 25-30% year-on-year in this financial year as the first quarter was a “complete washout” due to the lockdown imposed to curb the outbreak of Covid-19, according to the Gem & Jewellery Export Promotion Council.

Exports of gems and jewellery from the country nosedived 41.85% in the first four months of this fiscal to Rs 25,797 crore. Exports of cut and polished diamond fell 41.66% while exports of studded gold jewellery plummeted 60.65% in April-July.

Courtesy: Economic Times