Indian gems and jewellery exporters are riding high on the forecasted optimism for the upcoming US holiday shopping season. The forecast, published by the National Retail Federation (NRF), projects a healthy growth in holiday sales, leading to a positive outlook for India’s gems and jewellery exports. The sector, which had been grappling with fluctuations in demand, is now seeing signs of recovery, with October export growth showing a promising 10-11 percent increase. Despite earlier challenges, exporters believe the market has “bottomed out,” signaling a strong finish to the year.
US Retail Forecast and Growing Consumer Confidence
The NRF, which serves as the voice of the retail industry in the United States, remains bullish about the holiday season despite mixed economic signals in recent months. In its forecast for the 2024 holiday season, the NRF predicts a 2.5 to 3.5 percent increase in retail sales, a figure that suggests continued strength in consumer spending. According to NRF Chief Economist Jack Kleinhenz, while economic data has been inconsistent recently, the overall outlook remains positive.
“The economic data calendar was quite busy at the end of October, but while there were contradictions and mixed signals, we continue to believe the US economy remains in a good place,” said Kleinhenz, reinforcing confidence in consumer behavior during the critical holiday shopping period.
This optimism is expected to directly benefit Indian exporters of gems and jewellery, particularly as the US is the largest market for Indian jewellery products, including polished diamonds and studded jewelry. For Indian exporters, the positive forecast for US retail sales is a critical indicator of continued demand and growth prospects for their products.
Positive Growth for Indian Jewellery Exports in October
The Indian gems and jewellery sector has also experienced a resurgence in exports, with a reported 10-11 percent growth in shipments during October 2024. This follows a more challenging period earlier in the year, where the sector had recorded an 11 percent decline in exports up until September. The increase in October is being viewed as a sign that the industry has turned a corner after several months of slower performance.
Vipul Shah, Chairman of the Gems and Jewellery Export Promotion Council (GJEPC), expressed optimism about the sector’s prospects for the remainder of the year. “The outlook is good for the holiday season. We had witnessed an 11 percent decline in exports till September, but we are confident that exports have bottomed out,” Shah stated, underlining the improving market conditions.
This sentiment comes as a relief to the sector, which had faced challenges related to economic uncertainty, including slower demand from key export markets and internal issues such as oversupply. However, the recent uptick in exports has given confidence to exporters that the market is stabilizing and that a strong finish to the year is possible.
Addressing Production Challenges and Operational Adjustments
Earlier in 2024, the sector faced significant operational challenges, particularly in Surat, a key hub for diamond processing. In August, many diamond processing units in Surat were forced to suspend operations for up to 10 days due to an oversupply of diamonds and weaker demand from international markets. This temporary shutdown was a response to a slowdown in global demand, which had impacted the production capabilities of the industry.
However, Vipul Shah indicated that the industry has since regained better control over production, which has helped to stabilize the market. “Now we have better control over production,” Shah remarked, reflecting the industry’s ability to adapt to market fluctuations and ensure that supply meets the demand for the upcoming holiday season.
In addition to overcoming operational challenges, Shah is also confident that the upcoming March quarter will show continued improvement. “We are optimistic about the US market, as wage growth is outpacing inflation, and consumers are expected to maintain their spending power. The geopolitical tensions in the Middle East are likely to ease, and Europe too is stabilizing. If the Chinese stimulus package boosts consumption, our exports will benefit,” he added.
Geopolitical and Economic Factors Shaping Export Markets
While the US is the largest market for Indian gems and jewellery, other regions also play a significant role in the export mix. The Middle East, which is the third-largest market for Indian jewellery, is known for its strong demand for gold jewellery. This region has been a key consumer of Indian gold jewellery, and as the political and economic landscape in the Middle East stabilizes, it is expected to provide a more favorable environment for exports.
India’s second-largest export market, Hong Kong, serves as a gateway to China for diamonds. China’s economic recovery, particularly in response to recent stimulus packages, is also expected to play a pivotal role in boosting demand for Indian jewellery. If Chinese consumption increases as anticipated, it could further support the growth of India’s export sector.
Given these diverse market dynamics, Indian exporters are looking toward a more balanced and broad-based recovery in 2024. Shah highlighted the importance of these regions, noting, “We are optimistic that the recovery in the US, along with a more stable Middle East and the potential benefits from China’s stimulus package, will help us achieve sustained growth in exports.”
Outlook for the Gems and Jewellery Sector in 2024
Looking ahead, the outlook for India’s gems and jewellery industry in the upcoming months remains positive, driven by several key factors: strong consumer spending in the US, a stabilizing global economy, and improved production controls in Surat. The holiday season is expected to be a critical period for the industry, with retailers and exporters alike anticipating a significant boost in demand.
The industry’s overall optimism is further supported by ongoing global economic trends, including wage growth in major markets, easing geopolitical tensions, and the potential recovery in key regions such as Europe and China. As these factors align, the sector is poised to recover from earlier setbacks and potentially achieve a strong finish to 2024.
The confidence expressed by leaders in the industry, including Vipul Shah, reflects a belief that the worst is behind the sector, and that the combination of operational adjustments, market recovery, and consumer spending power will fuel continued growth. “We are optimistic about the US market, and we expect to see better results in the coming months,” Shah concluded.
Conclusion
The US holiday sales forecast has given a significant boost to the Indian gems and jewellery export sector, with October exports showing a solid 10-11 percent growth. Indian exporters are now looking forward to a prosperous holiday season, with the promise of continued growth in key markets such as the US, the Middle East, and Hong Kong. As the global economy stabilizes and consumer spending remains strong, the sector is confident that the worst is behind it, and that 2024 will bring stronger export figures and a more favorable market environment.
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