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India's jewellers focus on exporting silver as demand for diamonds drops

28 June 2020


India’s gem and jewellery exporters are focusing on silver jewellery and lab grown diamonds to help partially offset a decline in overseas demand for polished natural diamonds, with large swathes of the world’s richer consuming neighbourhoods set to report record economic contraction this year due to the lengthy lockdowns.


Demand for silver jewellery more than doubled in FY20, while sales of lab-grown diamonds overseas surged 88%: By contrast, exports of polished natural stones contracted 22%. “These are two sunshine sectors for the trade. Silver jewellery from India is being widely accepted in the world markets because of its design,” said Colin Shah, chairman, Gem & Jewellery Export Promotion Council (GJEPC). “We have asked our members to ramp up silver jewellery production to compete with China and Thailand, the other two manufacturers.”


Silver jewellery is manufactured largely in Surat and Jaipur, with minor output in Mumbai. Silver jewellery exports stood at $1.7 billion million in FY20, compared with $832 million in FY19, according to GJEPC data. Lab-grown diamond is another sector showing demand growth. “It is a new and emerging sector. Lab grown diamonds are used in fashion jewellery and accessories,” said Shah. “However, this does not mean that the natural diamond will lose its sparkle. Natural diamond will remain forever as it has an aspirational value.”


Exports of lab grown diamonds stood at $413.39 million as compared with $220.27 million in FY19. Shah said that silvery jewellery is relatively cheaper and more varieties and designs are available.

“There is demand for laser finished products and good orders from the European market. The lab grown diamond is expanding and increasing demand is observed in Domestic Tariff Area (DTA) as well as in Special Economic Zone (SEZ),” he said. Exports of cut and polished diamonds declined 22% to $18.7 billion. The drop is due to increasing tax incidence, the lack of liquidity, and shutdowns across the world. Shah said that the India-China stand off is yet to impact the export of diamonds to China. “We are keeping our fingers crossed as China and Hong Kong are major export markets for cut and polished diamonds. The tension between the two countries should not escalate further.”