This has effectively reduced the net export of diamonds from India.
On the other hand, exports of pearl-and diamond-studded jewellery have been stagnant, or have reduced in the same period. Exports of jewellery articles (as represented by HS Code 7113) declined from $13.7 billion in 2012-13 to $11.9 billion in 2016-17, and touched $10 billion till December in 2017-18, according to commerce ministry data (chart 2).
The declining net exports of pearls, stones and diamonds, along with the reducing trend of exports of studded jewellery point to a gradual rise in domestic consumption of gems and jewellery in India. India imported rough diamonds worth $2 billion each in November and December 2017, the highest in a month at least in the last two years. In the same month, exports of cut and polished diamonds fell to a one-year low of $1.59 billion, according to the GJEPC.
The spike in November and December was due to restructuring of the goods and services tax (GST) on pearls and diamonds from 3 per cent to 0.25 per cent and the seasonal effect of Diwali, the GJEPC said in an email response.
The GJEPC data on pearls and stones does not match that of the commerce ministry, mostly since some items like ‘worked rubies, sapphires and emeralds’ do not find place in the GJEPC data. The underlying trend, however, remains the same.
According to the GJEPC, pearls and stone imports rose to $200 million in December 2017 from half of the value in November. But the real surge in pearl and stone imports is reflected since February 2017. Looking at the annual trade figures, pearl and stone imports rose to $1.3 billion in 2016-17, a 40 per cent rise from $730 million in 2015-16. These have touched $1.5 billion in the first 10 months of 2017-18, the highest ever, according to the GJEPC data (chart 3).
Among pearls and stones, imports of (raw) pearls have tripled, from $300 million in 2015-16 to above $1 billion, the highest ever, in 2017-18. Imports of (rough) coloured gemstones declined from a peak of $570 million in 2016-17 to $220 million in 2017-18, while exports of coloured gemstones declined from $729 million in 2012-13 to $334 million in April–January 2017-18. Synthetic stones is the only segment that has shown a rise in trade. Rough synthetic stone imports peaked at $218 million in 2017-18, while exports of finished synthetic stones tripled in five years to $174 million in 2017-18.
Exports of pearls and stones have remained stagnant in the last couple of years at around $500 million a year.
But there are discrepancies in the data on pearls and stones from GJEPC and the commerce ministry.
The commerce ministry data puts imports of ‘cultured and worked’ pearls above $2 billion for 2016-17 and 2017-18. It also shows a sharp rise in imports of worked rubies, sapphires and emeralds from $505 million in 2012-13 to $1.4 billion in 2016-17, which fell to $500 million till date in 2017-18. According to the commerce ministry, total imports of pearls and stones stood at $4.4 billion in 2016-17 and $3.8 billion in 2017-18. While the two sets of data count different baskets of pearls and diamonds, both point to the same trend: imports of pearls and stones are rising like never before, while exports are stagnant or declining.
The commerce ministry’s repository on trade data, run by the Director-General of Commerce Intelligence and Statistics, had put the import of cut and polished diamonds at a record $6.3 billion in 2017-18 (April–November). The GJEPC subsequently clarified that re-imports, or return consignments (exported finished diamonds which could not be sold in export markets) amounted to $5.4 billion in the current year. Rather, the return consignments of cut and polished diamonds (the finished products once exported, which could not be sold in export markets) have been rising. They stood at $7.7 billion in 2016-17 and touched $5.5 billion in April–December 2017-18, according to the GJEPC. The commerce ministry is in the process of reconciling the trade data.