The impact of COVID-19 on the gems and jewellery industry

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The coronavirus pandemic has crippled India’s economy. Like many industries, the jewellery industry too has been hit hard owing to a long list of cancelled or postponed events, shows, exhibitions, and weddings for the next few months. Major jewellery brands had anticipated 2020 to be a doorway to a plethora of business opportunities. The production, supply, and export were aligned to meet the desired goals towards the end of the year. However, coronavirus was a big factor that turned the smooth operations upside down. The business dipped significantly as six to 10 carat diamond pieces and high-end chunky jewellery, which are widely popular in the Middle-East, suffered a major downfall. As businesses lost their profitability, the managements of key players duly intervened to firefight the crisis.

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The gold rates have fallen significantly and the world’s second biggest gold consumer has tumbled down as it is witnessing the slowest pace of growth in the last 11 years. The health authorities are discouraging people from venturing out for business or leisure which has brought exports and imports to a grinding halt.

Various avenues for investments that have not been explored due to the inactivity in the industry has led to serious liquidity crunch. The businesses were thriving on constant demand before the pandemic broke out. The gems and jewellery industry has suffered major disruption in its operations across the globe. No footfall The industry is witnessing no footfall at jewellery stores and despite the ongoing peak wedding season, mass shopping has come to a standstill. While the businesses are still navigating financial challenges, the aftermath of coronavirus on the gems and jewellery industry seems to be daunting. Technically, the rough diamond prices from the miners were predominantly high while polished diamond prices in the market were nominal, leading to a noticeable gap. Hence, the businessmen were already incurring huge losses in the Asian market. The existing trade war between China and the US has further triggered the downfall of the diamond business. In Hong Kong, almost half of 2019 resulted in losses owing to the riots in the city that largely affected the business.

As China and Hong Kong make up 25 to 30 percent of world’s consumption of diamonds, the business witnessed a major breakdown. These factors coupled with COVID-19 in the beginning of 2020 has severely impacted the smooth operations of the business. The three main hubs of diamond market, China, Europe, and the US have been under complete or partial lockdown due to the preventive measures undertaken by the governments.

Dependence on weddings As the coronavirus scare gripped potential buyers and existing clientele, the gems and jewellery industry lost its shine. As a precautionary measure, the government has encouraged the citizens to postpone wedding functions and only venture out for essential commodities during lockdown. The Indian jewellery market thrives on weddings. The industry further lost its lustre on Gudi Padwa which fell during the lockdown and again a great opportunity to clock high sales was lost.

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