The country’s diamond exports could shrink by a fifth to USD 19 billion by the end of 2020-21, as the novel coronavirus (n-CoV) outbreak amplifies sluggishness in global demand, according to a report.
In 2018-19, India’s diamond exports stood at USD 24 billion, according to Crisil Ratings. Consequently, exports in the next financial year would remain down or at best flat because any traction in the second half would be offset by the weak first half, the report added.
In the first nine months of this fiscal, India’s total diamond exports by value were down 18 per cent, year-on-year. About 40 per cent of these exports are to Hong Kong, which has seen dysfunctional local markets over the past year or so.
Moreover, it said there has been no diamond exports to the island since January 15 this year.
“Exports would continue to fall in the closing quarter of this fiscal, which typically accounts for roughly a third of India’s exports to the Southeast Asian region. Given extended holidays in the region and shutdown of markets in the aftermath of the n-CoV outbreak, exports worth over USD 1 billion may be lost in this quarter alone,” Crisil Ratings Senior Director Subodh Rai said.
The report added the n-CoV impact could not have come at a worse time for an industry that has been buffeted by tepid demand, declining realisations and the ongoing political conflict in Hong Kong.
Even if the n-CoV outbreak is contained in the next two months, trade normalcy and demand uptick from Hong Kong are unlikely before the middle of the next fiscal, it added.