Monday, February 11, 2008

Indian Diamond Exports to the US on the Decline

by Phillip Horton

The shining Indian diamond exports to the United States are on the decline and have left many traders in this sector worrying. Among the major reasons cited for this slowdown in the Indian diamond exports to the United States experts say that the slowdown in the US and the rising value of the Indian rupee are major reasons for the decline. The shadow of loss in business is looming large over the Santacruz Electronic Export Processing Zone or SEEPZ located in Mumbai. The SEEPZ is the main center for the finished diamond exporters in India. The SEEPZ is India’s first such zone that is dedicated to export and the SEEPZ has played a major role in the exports of Indian gems and jewellery. The SEEPZ industrial area is located in the busy Mumbai suburb and is an enclosed area with high security due to its costly export items such as jewelry and diamonds.

The SEEPZ has as many as 130 units of jewellery and its total share of jewellery exports of India amounts to 38% which comes to around exports worth $5.21 billion. The SEEPZ as such holds an important position in the jewellery exports of India and the international retailing brands such as Wal Mart, Zales, and Sterling order their jewellery products from here. However, the decline in the exports began to be seen from July of 07 when the United States removed exemptions on customs duty for the Indian jewellery products. The reason for withdrawing these exemptions by the US government is cited as India’s super competitiveness in the exports of the gems and jewellery.

Hence, the super competitiveness of India in the exports of jewellery products did not qualify for the concessions which are mainly for the developing nations. The influential diamond traders kept of lobbying for the concessions, but they failed to impress the decision by the US government. This setback for the Indian diamond exports was not enough because it then suffered from the fast rising value of the Indian rupee as against the dollar in the year 2007 and there was also the slowdown in the economy of the United States which contributed greatly in the decline of the Indian diamond exports to the US.

Another reason cited for the decline in Indian diamond exports to the United States according to TP Gopalakrishnan who is the executive secretary of SEEPZ Gems and Jewellery Manufacturers Association is that people in the US are now staying away from gifting diamond studded jewellery. Since in the US culture, diamond studded jewellery is used as gifts which is the reason of India’s diamond exports growth. People in the United States now seem to be saving money for difficult times and hence, the Indian diamond export to the United States is recording a decline. The US market is the major market for the Indian diamond industry and any change in the habits of the people is bound to impact the Indian diamond sector. Gopalakrishnan also stated that the US market for the Indian diamond industry is amounts to 34% when compared with other markets of the world for the Indian diamond exports.

 

 

 

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