Diamond Financier Sees China’s Loss as India Gain on Trade Heat
Simmering trade tensions are going to nudge many global jewelry majors to shift their base to India from China, says IndusInd Bank
(Bloomberg) -- Simmering U.S.-China trade tensions are going to nudge many global jewelry majors to shift their manufacturing base to India from China, according to the chief executive officer of a top diamond financier.
“Some major global players in gems and jewelry are pausing to re-balance the business on account of the trade tensions,” Romesh Sobti, chief executive officer at Mumbai-based IndusInd Bank Ltd., said in an interview. “The natural shift in the manufacturing business will be to India from China.”
The relocation of manufacturing facilities will give a much-needed boost to India’s gem and jewelry exports, which fell about 10% in the three months to June 30. Tighter lending rules and higher borrowing costs in the nation as a fallout of a $2 billion bank fraud last year have worsened the operating environment for the business that contributes 15% of India’s exports.
While a possible shift of manufacturing base by companies looking to deleverage their China strategy is in the offing, there will be hurdles for entry into India, Colin Shah, vice chairman at the Gem & Jewelry Export Promotion Council, said by phone. The South Asian nation is a natural destination for the shift in business from China because of skilled labor and decades of experience in cutting and polishing diamonds.
“Unless there is a favorable tax regime and ease of doing business it would be challenging for the industry to move from China to India,” Shah said. IndusInd is among the top 3 banks financing the global diamond business, according to the council backed by the nation’s government.
To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Anto Antony
©2019 Bloomberg L.P.
