Rising Tension Between Israel and Palestine Unlikely to Impact Gem and Jewellery Exports: GJEPC

The escalating tension between Israel and Palestine is not projected to negatively impact the gem and jewellery industry's exports, according to the Gem Jewellery Export Promotion Council (GJEPC). Despite the geopolitical unrest, India has experienced significant exports of gem and jewellery to Israel, totalling USD 1,279.76 million in 2022-23.

Israel as a Trading Centre

It is noteworthy that Israel functions as a crucial trading hub for rough diamonds with exports amounting to USD 1,782.80 million. Primarily serving as a re-export market, Israel plays an integral role in India’s gem and jewellery trade. GJEPC chairman Vipul Shah expressed solidarity with the Israeli diamond trade amidst their national crisis while stressing that it was too early to definitively gauge the situation's impact on Indian industries.

No Disruption in Trade

Despite the ongoing conflict in Israel, no disruption has been observed in regular dealings so far. The council remains optimistic about a quick resolution leading to peace restoration in this vital geo-political and economic region.

Inventory Management Strategy

Kirit Bhansali, GJEPC vice chairman explained that from October 15 onwards, most members plan on halting imports of rough due to high inventory levels. This strategy aims at easing domestic inventory by pausing imports of roughs from October 15 till December 15.

A Declining Trend?

The former GJEPC chairman Colin Shah pointed out that there had been almost a 27 per cent decrease in trade between India and Israel from USD 2,794.39 million recorded last year. He stated that both imports and exports have seen respective declines of around 42 per cent and nearly14 per cent due largely to high inventory levels within India itself. This declining trend could be further impacted by the ongoing war situation.

Impact on Diamond Trade

In FY23, exports of cut and polished diamonds (CPD) to Israel amounted to USD 1,203.73 million, representing a year-on-year decrease of approximately 11 per cent. Imports have also witnessed a significant decline with rough diamonds dropping by over half to USD 519.97 million in the same fiscal year.

A Plea for Import Cessation

On September 26, industry bodies appealed collectively to their members recommending cessation of rough diamond imports for two months starting from October 15 due to slowing global demand and increasing domestic inventories. The circular issued jointly by GJEPC, Bharat Diamond Bourse, Surat Diamond Bourse, Mumbai Diamond Merchants Association and Surat Diamond Association cited factors such as softer prices due to mismatched supply-demand dynamics leading to increased inventories in polished diamonds.

In conclusion, despite the ongoing geopolitical tension between Israel and Palestine coupled with internal inventory management issues within India’s gem and jewellery industry itself; it is too early at this stage to definitively predict any long-term adverse impact on export trade relations between India and Israel.