The Israel-Hamas conflict, a persistent and complex issue in the Middle East, has raised concerns among Indian exporters about its potential impact on the trade of gems and jewellery between India and Israel.
In recent years, the gems and jewellery trade between India and Israel has been robust, contributing significantly to the economic ties between the two countries. However, the escalating tensions in the region have cast a shadow over this lucrative industry.
To comprehend the potential ramifications, it’s essential to review the trade figures. In the fiscal year 2021-22, the total gems and jewellery trade between India and Israel reached an impressive USD 2.8 billion. Unfortunately, this figure witnessed a noticeable decline, falling to USD 2.04 billion in the following fiscal year, 2022-23. This reduction in trade volume could be attributed to the uncertainties brought about by ongoing conflict.
The war threatens to further intensify the challenges faced by this industry. Several factors contribute to this concern:
Supply chain disruptions: Any conflict in a region can disrupt the smooth flow of goods. Gems and jewellery, often involving delicate and high-value items, require a secure and efficient supply chain. The conflict may hinder the transportation of these precious commodities, leading to delays and potential losses.
Economic uncertainty: Conflicts can have a destabilising effect on economies, leading to currency fluctuations and economic downturns. Such instability can reduce consumer spending and, consequently, demand for luxury goods like gems and jewellery.
Geopolitical impact: Trade between countries can be influenced by their political relationships. The Israel-Hamas conflict may lead to diplomatic tensions or changes in trade policies, impacting the gem and jewellery trade negatively.
Safety concerns: The safety of goods and personnel involved in the gems and jewellery trade can become a significant concern during a conflict. Security risks may result in increased insurance costs and reduced willingness to engage in cross-border trade.
While the Israel-Hamas conflict does pose significant challenges to the gems and jewellery trade between India and Israel, it is essential to monitor the situation closely and adapt to the evolving circumstances. The strong economic ties and historical trade relations between the two nations provide a foundation for recovery and growth in the industry once the conflict subsides.