The sagging consumer demand from the US has made the gem and jewellery export production industry from India look at all sorts of other markets around the world and concentrate a lot more on the domestic consuming market, which has been showing impressive growth. But the fact is, no other market is anywhere near being able to take up the slack left by the drop in US demand. And anything an Indian exporter can do to increase penetration in the US is still vitally important.

But what does one do when, in addition to a drop in demand, the US dollar has been sliding steadily downhill against almost every other currency in the world? The Indian export industry has been bemoaning the strong rupee and calling on the Reserve Bank of India (the country’s central bank) to do something to help.

But the highly respected economic writer Swaminathan Iyer says he hasn’t found any evidence at all that the strong rupee has hit the Indian export production industry. In fact, he finds that in relative terms, the Chinese yuan has appreciated more against the dollar than the rupee. For the Indian jewellery export industry, this is great news. Having been taken off the US government’s generalized system of preferences (GSP) list recently, Indian jewellery exports instantly became 5 ½ more expensive for the US consumer – much to the benefit of Chinese jewellery exports.

A yuan that is rising more strongly against the dollar than the rupee will erode much of that benefit. Overall though, I don’t know how much difference it will make. The categories of jewellery that have shown the greatest drop in demand in the US are those in with lower price-points. The kind that’s exported from India…