The size of India’s gems and jewelery sector is expected to decline by 3.9% this year, according to the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the highest body of the Chambers of Commerce of India.
ASSOCHAM forecasts that the domestic market value of the gems and jewelery sector will shrink to $22.3 billion in 2009 compared to $23.43 billion last year an the demand for gold and diamonds in the domestic market has already dipped with rising commodity prices coupled with low disposable income.
Sajjan Jindal, President of ASSOCHAM commented, "Spending by higher income consumers is particularly getting weak, hence preference of gold and diamond jewelery have been shifted to other luxury items."
Since October 2008, Indian exports of gem and jewelery products have witnessed a sharp decline.
In October, November, and December 2008, India’s gem and jewelery exports declined by 16%, 34% and 26%, respectively. The trend continued into the new year with gem and jewelery exports falling 34% in January and 35% in February.
Due to lackluster demand and high prices during the first quarter of 2009, gold imports to India dipped by 97% to 1.8 tonnes, compared to 61 tonnes in the same period last year.