Gems and jewellery exports, one of the largest categories in India’s export basket, ended FY24 with a steep decline, sinking to its lowest levels in three years due to lower global demand.
According to data from the commerce ministry’s Niryat portal, gems and jewellery exports stood at $32.71 billion during FY24, down from $37.96 billion in FY23 and $38.94 billion in FY22.
During the pandemic, the exports of gems and jewellery suffered along with other commodities as most economies resorted to stringent lockdowns to prevent the spread of the coronavirus.
Export target
The pandemic saw gems and jewellery exports plunge to $3.86 billion in FY19 and $4.32 billion in FY20 before recovering to $26.02 billion in FY21.
The Gems and Jewellery Export Promotion Council (GJEPC), a government-backed body, had set an export target of $40 billion in FY24 on the back of higher sales to the UAE.
The fall in demand was due to challenges from a downturn in both China and the US, key markets for India, said a commerce ministry official, who spoke on the condition of anonymity.
“It is likely to improve in FY25, as the global economy is expected to do better in FY25,” the person added.
A commerce ministry spokesperson didn’t respond to emailed queries.
Rising inflation
The global economy has been grappling with rising inflation and high-interest rates, particularly in Europe and the US, India’s biggest export markets. That said, there have been signals that some of these factors might ease this year.
India imports rough diamonds since it doesn’t produce these commodities in any significant quantity. It exports gems and jewellery, making value additions in the process.
India’s gems and jewellery exports to the North American region stood at $10 billion in FY24, while exports to North East Asia, including China, stood at $7 billion, down from $13 billion and $9 billion in the previous year (FY23).
Trade deficit
Gems and jewellery exports to West Asia and North Africa, which includes the UAE, a major market for India’s exports, rose to $9 billion in FY24, up from $7 billion in the previous year.
Meanwhile, India’s overall trade deficit, including merchandise and services, shrank to $78.12 billion in FY24 from $121.62 billion in FY23.
The silver lining is that the World Trade Organization expects global goods trade to have recovered gradually during 2024, following a downturn in 2023 due to high energy prices and inflation.
As economic pressures ease and incomes rise, the volume of global merchandise trade will increase by 2.6% in 2024 and 3.3% in 2025, the WTO said in its Global Trade Outlook and Statistics report in April.
During 2023, global trade declined 1.2% amid geopolitical and economic turmoil, after registering a 3% growth in 2022.
In value terms, the decline in merchandise exports was more pronounced in 2023, down by 5% to $24.01 trillion.
However, regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks to the forecast, the WTO report added.