- Business Desk
- Business Desk
The war that’s shaking up India’s $30 billion jewellery export sector
When I first started dealing in jewellery exports a few years back, I thought the biggest risk was a bad design or a delayed payment. Little did I know that a war half way across the world could end up messing with the very crates that keep my gold bangles and diamond necklaces moving from Surat to New York, London or Dubai.
Why a conflict so far away matters to us here
Honestly, at first I brushed it off. The US‑Israel‑Iran confrontation seemed like something that would stay in the newsfeeds, not in my ledger. But then the shipping agents started calling, saying that vessels were being rerouted, port fees were going up and some of the usual freight forwarders were pulling out of the region. In most cases this meant that a shipment that would normally leave Mumbai port within two days was now stuck for a week or more.
To give you a picture, imagine you’re ordering mangoes from a farmer in Ratnagiri and the truck driver suddenly tells you the road is closed because of a protest. Your mangoes turn sour before they even reach your kitchen. That’s pretty much what’s happening with our jewellery containers – they’re getting delayed, and the cost of keeping them safe on the water is climbing.
Personally, I felt a bit of a panic attack when the first delay hit. Our client in the US had a big order for wedding jewellery, and we had promised to deliver before the wedding season. Suddenly the sea‑route via the Suez Canal became risky because of the heightened naval activity, and alternative longer routes via the Cape of Good Hope added a few extra weeks. That’s when we realised the war was not just a headline; it was a real roadblock for our business.
Shipping delays and the domino effect
Shipping delays are maybe the most visible impact. Many of us rely on container ships that pass through the Red Sea and the Suez Canal – the shortest path from India to Europe and the Americas. Since the conflict escalated, naval forces have been on high alert, and some shipping lines have voluntarily avoided the area. The result? Our containers are taking longer routes, and the freight costs are bubbling up like the hot water we use for chai.
One of my long‑time freight partners told me that the average freight rate for a 20‑foot container has jumped from around ₹1,20,000 to nearly ₹2,00,000. That’s a huge jump for a business that works on thin margins. Plus, the longer transit time means we have to keep more inventory in our warehouses, which ties up cash that could otherwise be used for buying raw gold or paying artisans.
There’s also the issue of port congestion. With some ships avoiding the Red Sea, more vessels are trying to dock at Gulf ports like Dubai and Jeddah, causing bottlenecks. Even when our containers finally reach the Gulf, they sometimes sit in the port for days awaiting clearance. In one recent instance, a consignment of gold earrings destined for the UK sat at Jebel Ali for almost ten days because customs were double‑checking the documentation due to the heightened security environment.
All these factors together make the supply chain feel like an old Indian railway system – you never know which train will be delayed, and you always have a backup plan ready, just in case.
Higher costs beyond just shipping
Besides the obvious freight hike, the war has inflated other cost heads. Insurance premiums for maritime cargo have risen sharply. When there’s a risk of naval engagements or piracy, insurers charge more to cover potential losses. I remember getting an insurance quote that was 30‑40% higher than what we paid a year ago. That increase directly eats into the profit margin of each piece we export.
Then there are the currency fluctuations. The Indian rupee has been a bit unstable against the dollar lately, partly because global investors are moving money into safer assets like US Treasury bonds amidst the conflict. For exporters who bill in dollars, a weaker rupee can be a double‑edged sword – it makes our exports cheaper abroad, but the cost of importing raw materials (like diamonds from Antwerp or gold from the Middle East) becomes more expensive in rupee terms.
And let’s not forget about the indirect costs: extra paperwork, more frequent communications with customs brokers, and the need to constantly track the movement of each container. My team now spends an extra two or three hours a day just on email follow‑ups with shipping lines and freight forwarders. That’s time that could have been used for designing new collections.
Impact on the artisans and small manufacturers
Most of us in the export chain are small to medium enterprises, many of them family‑run workshops in Surat, Moradabad, and Kolkata. The war’s ripple effect hits them hard because they don’t have big cash reserves. When freight costs go up, they either have to absorb the cost or pass it onto the buyer. Either way, it squeezes the margin.
I spoke to a friend who runs a boutique goldsmith unit in Surat. He told me that he had already reduced the size of some of his designs to cut down on gold usage, hoping that smaller items would be cheaper to ship. He also mentioned that a few of his workers have started looking for other jobs because the unpredictable cash flow makes it hard to guarantee regular wages.
Even the downstream retailers feel the pinch. Boutique stores in Delhi that order jewellery from these exporters now see longer lead times, and some customers start canceling orders because they need the piece for a specific festival or wedding. In most cases, the whole chain feels the strain – from the artisan shaping the intricate Kundan work to the export manager negotiating with a shipping line.
What the numbers say – $30 billion at stake
The jewellery sector contributes roughly $30 billion to India’s export earnings each year. That’s a massive chunk, and any dip can affect the country’s trade balance. While the overall demand for Indian jewellery abroad has remained steady – people still love our gold and diamond pieces – the logistical challenges are cutting into the realized value of those exports.
Data from industry bodies shows that export volumes have slipped by about 5‑7% in the past few months, mainly because orders are being delayed or cancelled due to the logistical nightmare. It’s not that customers have lost interest; it’s more about the inability to get the product on time.
From my own records, I can say that the average order value I see has gone down marginally because buyers are now negotiating discounts to compensate for the higher shipping costs they will bear on their end. In most cases, the discount is around 2‑3%, which doesn’t seem like a lot, but when you multiply it across thousands of shipments, it adds up.
How we’re coping – practical steps and work‑arounds
Facing this situation, many of us have started looking for ways to mitigate the impact. Here are a few things I’ve tried, and many of my fellow exporters have found useful too:
- Exploring alternative routes: Some businesses are using the longer but safer route around Africa. Though it adds 10‑12 days to transit time, it can be cheaper than paying sky‑high premiums for the Red Sea corridor.
- Bulking shipments: Instead of sending many small containers, we’re consolidating orders into fewer, larger containers. It reduces the per‑unit freight cost, though it requires better inventory planning.
- Negotiating better insurance: By bundling multiple shipments into a single insurance policy, some exporters have secured a discounted rate.
- Using a local freight forwarder in the Gulf: Having a trusted partner on the ground helps clear customs faster and reduces the days a container sits idle.
- Adjusting payment terms: To keep cash flow healthy, we’ve started asking for partial advance payments before shipping, especially for high‑value diamond pieces.
These solutions are not perfect, but they do provide a bit of breathing room. It’s like when you’re stuck in a traffic jam in Mumbai and you decide to take the Coastal Road – it may be a bit longer, but at least you’re moving.
Looking ahead – will the demand fall?
Most of my colleagues believe that the underlying demand for Indian jewellery abroad will stay strong. After all, Indian gold designs have a unique appeal, and festivals like Diwali and Raksha Bandhan drive buying even overseas. What’s changing is the cost of getting those pieces from our factories to the customer’s door.
In the longer run, if the conflict continues, we might see a gradual shift in the market. Some buyers could start sourcing from other countries with smoother logistics, like China or Thailand, even if the designs aren’t exactly the same. That could chip away at India’s market share, but it’s too early to say for sure.
On a personal note, I’m trying to stay optimistic. I’ve started experimenting with more localised markets – selling directly to Indian diaspora communities in the Gulf through online platforms, which reduces the reliance on long‑haul shipping. It’s a small step, but it feels like a way to adapt rather than just complain.
Conclusion – a battle on the seas that reaches our workshops
To sum it up, the US‑Israel‑Iran war, though geographically distant, is creating a cascade of challenges for India’s jewellery export industry. From shipping delays and soaring freight costs to higher insurance premiums and tighter cash flow for artisans, the impact is real and felt across the entire value chain. Yet, the demand for our jewellery remains robust – it’s the logistics that are the real stumbling block.
We are learning to navigate these choppy waters by re‑thinking routes, consolidating shipments, and tapping into digital sales channels. It’s a tough phase, but I believe our industry’s resilience – the same spirit that helped us bounce back after the 2008 global crisis – will see us through.
So the next time you see a beautiful gold necklace from Surat in a boutique abroad, remember that it may have travelled a longer, pricier journey because of a war happening thousands of kilometres away. And somewhere in a small workshop, an artisan is still polishing that piece, hoping that the challenges will soon calm down and the world can once again appreciate the sparkle of Indian jewellery without all these extra hurdles.
