CRISIL: Gems and Jewellery Sector SMEs to be Hit Hard

SEATTLE (Scrap Monster): The latest CRISIL Research report says that gem and jewellery sector in India is likely to be hit hard by high gold prices and weak global demand. The small and medium enterprises (SMEs), which account for 65-70% of the sector, will be impacted the most.

CRISIL predicts huge contraction in domestic as well as export demand, mainly due to Covid-19 pandemic. In value terms, the sector is expected to contract by 35-40% in the current fiscal. The postponement of global trade shows and jewellery expos has badly impacted the business. The gems and jewellery exports by the country have declined by approximately 75% in the first quarter of the fiscal, compared with the previous fiscal.

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The significant decline in export orders is expected to hit the SMEs in Surat, which is considered as the country’s largest diamond cluster. Incidentally, Surat accounts for 80-90% of the country’s diamond exports.

The domestic demand in the country too has dropped by almost 70% year-on-year. The sky-high gold prices and closure of stores on account of lockdown restrictions to curb the pandemic has hit domestic sales. With gold prices projected to rise further during the fiscal, the demand is expected to decline further. At the same time, CRISIL anticipates notable surge in bar and coin investment.