Nothing is truly glittering in India’s jewellery business. The mood is sombre with banks unwilling to loosen their purse strings. The fund crunch worsened after the Nirav Modi and Mehul Choksi crises set in. Banks are asking borrowers more questions and for more documentation, affecting the working capital cycle of the gems and jewellery industry. And if you are a mid-sized player, the wait could even extend to one month. The industry accounts for a handy 16% of India’s total exports. Symptoms that all was not well were evident when last year’s gem and jewellery exports closed at $41 billion, a 5% drop from the previous year, with a fall of another 2% till this October. The domestic story reads no better with Diwali, the barometer for consumption, witnessing 30-40% drop in jewellery sales thanks to rising gold prices. The World Gold Council (WGC) expects the overall gold demand in India to be around 800 metric tonnes in 2018 just a 10% increase over 2017 levels.

While the credit squeeze could continue to dampen overall gold exports, Indian jewellers are unlikely to see intense competition from other markets. While the likes of China and Thailand specialise in machine-made jewellery, India is the last word when it comes to handmade. Demand does exist but it will call for the banks to kick-start the process, something they are not inclined to do in a hurry. With key state elections around the corner, some decisions may have to wait a wee bit longer. Uncertainty till then is the name of the game.