India’s exports to the US stands at $6.1 billion.
BANGALORE: The Federal spending cuts or sequester, is likely to affect India’s exports of polished diamonds and jewelry to the United States.
Industry experts said the new law is not only aimed at cutting the government’s spending limit, but would also decrease liquidity in the American market, reported The Times of India. Since diamonds and diamond jewelry falls under luxury items, consumers may reduce their annual spending on these.
India’s exports to the US stand at $6.1 billion, higher than that from Belgium and Israel, and dominates the contribution to the USA’s import basket in the jewelry category with a 23.4% share.
With annual sales in the US pegged at around $65 billion, Indian diamond merchants, especially those based in Surat, are now worried that orders could dwindle, said the report.
Over 50% of the diamonds exported from India find their way to US shelves. October-end is also the time when most orders are placed with Indian diamond houses, in time for the Christmas and New Year seasonal holidays.
“Though the US is no longer the leading export destination of cut and polished diamonds manufactured in India, (UAE has jumped to first position) it did account for a major portion of the $27 billion worth of polished diamonds exported from India in 2011-12,” said diamond exporter, Kirti Shah, reported the Times.
Shah added, “Spending cuts by the US federal government means that there will be less money with people, which translates into lower consumption of jewelry and diamonds. If that happens, export of diamonds and jewelry to the US will suffer.”
“The US is still a leading destination for Indian exports, as far as diamonds and jewelry are concerned. Consumers in the US will likely not spend more on jewelry and diamonds due to reduced spending and liquidity,” said a senior office-bearer of Gems and Jewelry Export Promotion Council (GJEPC).