'India's diamond exports expected to grow 20% this fiscal as markets improve'

Indias diamond exports expected to   grow 20% this fiscal as markets improve

Mumbai: With the export markets recovering from the pandemic, India's diamond outbound shipments are expected to grow 20 per cent this financial year to over $20 billion, according to a report.

With the pandemic said to be contained in China, and the US inoculating 40 per cent of its population, consumer confidence has improved in both countries, CRISIL Ratings said in the report.

Towards the second half of last fiscal, pent-up demand and stimuli had buoyed consumption of diamonds and jewellery in the US and China, which account for 75 per cent of India's polished diamond exports.

Demand will also be bolstered by improving economic growth and declining unemployment, it noted.

Additionally, the report stated that the restrictions on overseas travel and lower spending on hospitality mean celebrations are largely restricted to spending on gifting, including diamond jewellery. "Exports have been rising and averaging at $2 billion per month since October 2020. To be sure, there will be some moderation in the second quarter of this fiscal, which is a lean period typically.

"But, the festival season that begins in the export destinations from the third quarter will boost revenue to pre-pandemic levels. That will tantamount to a 20 per cent growth in diamond exports by revenue this fiscal," CRISIL Ratings Director Rahul Guha said.

The report further stated that revenue from exports reached $16.4 billion last fiscal, marking a decline of 12 per cent, well below the plunge expected when the world went into unprecedented lockdowns.

But, as nations recovered well in the second half, the tumble in exports was halted, it added. Meanwhile, the report said the onset of the second wave saw smaller labour-intensive polishing units facing 20-30 per cent labour migration.

The industry's current operating rate is over 80 per cent, with sufficient inventory to tide over any production loss in the first quarter of this fiscal. The pandemic has also improved the management of rough diamond inventory, the report said.

It added that earlier, the prices of roughs moved sharply versus polished diamonds, leading to stocking up of the former.

The pandemic then led to a correction in the inventory of roughs in the last financial year and this trend continues, it noted.

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