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GJ slowdown to impact SMEs severely

Revenue growth in the gems and jewellery industry is expected to slow down this fiscal year, with export demand falling for the second consecutive year due to a slowdown in key markets even as domestic demand remains positive.Small and medium enterprises (SMEs), which contribute almost 70 per cent of the industry revenue, had logged robust growth in revenue and profit in fiscal year 2022 due to the release of pent-up demand and resumption of large-scale weddings and festivities after two pandemic-hit years.

In fiscal year 2023, while financial information of SMEs is yet to flow in, we estimate the revenue of domestic players to have slowed down following an increase in gold prices and that of exporters to have fallen due to a drop in demand for cut and polished diamonds.

In fiscal year 2024, exports of cut and polished diamonds, which constitute over 60 per cent of India’s gems and jewellery exports, are set to fall for the second consecutive year after declining 10 per cent in dollar terms in fiscal year 2023 and by almost a third during the first two months of the current fiscal year.

Recessionary pressures in the US, which is the largest market for cut and polished diamonds, are likely to impact demand and, in turn, revenue and profitability.SMEs in this industry are more susceptible to fluctuations in end-user demand and are expected to be impacted severely.


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