The gem and jewellery industry heavily depends on trade and a severe fall in exports has brought the industry to a standstill.
Gem and jewellery industry in India is wavering for a long time and now the coronavirus-effect has further worsened the situation. The gem and jewellery industry heavily depends on trade and a severe fall in exports has brought the industry to a standstill. “The industry has witnessed a continuous decline in exports in all of the 11 months of FY20, with February 2020 being a major disappointment,” said a report by Care Ratings. A 41 per cent on-year decline in cut and polished diamonds exports led to a cumulative exports fall of 19 per cent on-year for the overall gems and jewellery industry in February 2020, it added.
Even the domestic retail jewellers have been going through a tough time. While high gold prices in recent months have kept the demand low, the current lockdown has forced them to shut their shops. This will hit the industry’s performance in the current quarter, and may also show spillover effects in the first half of the coming fiscal, said the report.
While Gudi Padwa could not bring any cheer to the gold and silver market, the upcoming festival of Akshay Tritiya is also not expected to bring back the market’s lost charm as jewellery demand is expected to remain muted in the short-term. However, even as the short-term outlook is negative, the long-term outlook is positive.
The growing consciousness of branded jewellery, increasing purchasing power in Tier 2 & 3 cities, increasing working female population, and rising preference towards diamond jewellery are expected to push the gem and jewellery industry in the long-term.
Meanwhile, the prices of precious metals remained elevated in FY20 due to multiple macro-economic concerns such as unsettling trade wars, increased volatility in oil prices, Brexit uncertainty and political tensions in the Middle East, amongst others. Now, with the outbreak of Covid-19, investors have considered precious metals such as gold and silver as their safe-haven investment.