Exports Sparkle

Updated: Nov 30 2002, 05:30am hrs
Indias diamond industry is sparkling again after two years. During April-October 2002, the country exported polished diamonds and jewellery worth $5.2 billion, up 30 per cent from $4bn in the same period last year. While that is the good news, it must be borne in mind that the export of gems and jewellery, which accounts for about a fifth of the countrys total export value, is a cyclical business. This calls for a strategy that seeks to minimise its impact on domestic trade. More than the sparkling diamonds, smiles must have also returned to the faces of hundreds of Surat-based diamond polishing workers who had a torrid time during the last two sluggish years. This is because traders from that region account for nearly 90 per cent of the countrys trade in gems and jewellery. While in 1999-00 there was a millennium euphoria that unleashed a wave of gifts and mementos in America and other Western nations, the slump during the following two years was triggered by the terrorist attacks in the US, a market which accounts for 35 per cent of gems and jewellery exports from India, and disturbed political conditions in Afghanistan.

Interestingly, it is American demand that has fired the current surge in Indias exports of gems and jewellery which optimists believe might touch $9.4 bn this year. However, to minimise the overwhelming reliance on a single market, it is time for Indian gems and jewellery exporters to fan out to other markets through market surveys or trade exhibitions. This is a business that also moves on personal whims and fancies. For such reasons, the current years show should not generate complacency. Basically, the supply of rough diamonds is controlled by De Beers and some others. It is plausible that the supply stream may not contract abruptly, but margins can as price of imported rough diamonds is on the rise. A 30 per cent plus growth must be seen against the 12 per cent compound annual growth rate for gems and jewellery exports during 2002-07 as envisaged in the Medium Term Export Strategy. This strategy does emphasise focus products and focus markets that take into account growth potential as well as comparative cost advantages. But these parameters may not always be driving forces in the global market. Non-economic factors can add to risk and uncertainty as seen in recent years. Quite obviously, the challenge for the trade and Indian government is to minimise their impact.