The retail sales of gems and jewellery in India are estimated to have tanked 80 per cent in last 10 days due to Covid-19 pandemic, while exporters fear business losses could go as high as 50 per cent.
"For the last ten days, people have not been coming to retail outlets to buy jewellery and many have shut shops. We estimate a loss of 80 per cent business and this may worsen in the coming days as more restrictions are announced. We don't know how long it will continue," said Ananthapadmanabhan, chairman, All India Gems and Jewellery Domestic Council (AIGJC) and Managing Director of Chennai based NAC Jewellers.
According to him, the country has about 4-5 lakh gold retailers and the industry employs about 60 lakh people directly and over two crore indirectly.
"The industry is sure to have lost over 75-80 sales this month as people are buying only essential commodities and tend to keep cash with them as there is no clarity on how long this crisis will go on and fears of worsening of the situation. Majority of the business we got is from online purchases," said Panjkaj Khanna of Khanna Gems,which sells gems both online and offline.
Gold sales in the country dropped 9 per cent in 2019 to 690.4 tonnes, compared to 760.4 tonnes in 2018, mainly due to over 20 per cent increase in prices in the first half of the year. However, sales in terms of volume increased by 3 per cent to Rs
2,17,770 crore during the same period from Rs 2,11,860 crore earlier, according to the World Gold Council (WGC).
PR Somaundaram, managing director, WGC India, said all asset classes have run into a crisis following the Covid-19 scare and in an uncertain scenario, India may miss the gold sales targets.
"It is fear and prime concern at the moment is well-being of the people and how early to get out of the crisis than thinking of the forecasts," he said. India's average long-term gold demand is likely around 850 tonnes given its affinity to gold and economic and social context and India's gold demand was predicted to be in the range of 700-800 tonnes in 2020, according to the WGC. The Diwali and Dhanteras had revived hopes but the volatility coupled with higher prices impacted the demand. With the closure of many malls and scaling down or postponing marriages have also impacted the demand, despite gold prices having fallen in recent days.
Ananthapadmanaban says the government should urgently consider measures such as allowing retailers more time to file tax returns, including advance tax and GST etc.
Meanwhile, exporters of gold and jewellery say they are already experiencing a 50 per cent slump in production and exports of gems and jewellery in March.
"We were already facing a decline in exports and production. With hubs like Dubai and Hong Kong coming to a standstill and all international flights being stopped, we are staring at a full lockdown. Now we don't know how long this crisis will go on," said Colin Shah, Vice Chairman of the Gem and Jewellery Export Promotion Council (GJEPC).
India's gems and jewellery exports had declined by 20.26 percent in value to Rs 20,763.28 crore in February compared to Rs 26,039.32 crore in February 2019. The overall exports declined by 6.38 percent to Rs 2,36,839.34 crore during April 2019 to February 2020, compared to Rs 2,52,973.24 crore during the same period last year. Exports of cut and polished diamonds in February fell by 40.66 per cent to Rs 9,897.14 crore, compared to Rs 16,679.94 crore in the same month last year, says GJEPC.
Meanwhile sources from Surat, the main hub for polishing and processing rough diamonds and gems, said it has been decided not to close units as it will create huge unemployment. Working hours have been cut short and adequate precaution have been taken to ensure health safety of the workers in the units.
The main export destinations for Indian gems and jewellery are the UAE, US and Hong Kong. The HKTDC Hong Kong International Diamond, Gem & Pearl Show 2020 (originally scheduled for March 2-6, 2020) and the HKTDC Hong Kong International Jewellery Show 2020 (originally scheduled for 4-8 March) have been rescheduled to May 18-21, 2020.