Price rise, weak demand for specific diamonds affect Indian G&J industry

Sai Nikesh | The Dollar Business

A weak demand for polished diamonds locally and globally is likely to affect India’s rough diamond imports, which is likely to decline by 10-15% in the current year, said news reports on Tuesday. Speaking to The Dollar Business, Sabyasachi Ray, ED, Gems & Jewelry Export Council (GJEPC), said the profitability of the industry has suffered due to high prices of rough diamonds and lesser demand for polished diamonds. Taking this and other scenarios, including the increasing cost of finance of Indian banks and undisclosed mixing of synthetic/lab grown diamonds, the business sentiment is not that conducive and the manufacturers have cut down their production from 10-40% in different cases which has resulted in the overall imports falling by 10-15% in this year, he noted. He further informed that at the meeting of diamond exporting companies on Tuesday at Bharat Diamond Bourse (BDB), it was decided to follow discipline in imports & production based on the market demand strictly and on hindsight, this is the right decision under the prevailing circumstances. As a first step to cope up with the situation, the companies should exercise self-discipline in import and purchase of rough diamonds based on their inventory and demand for polished diamonds, although it might affect the overall import of rough diamonds to India.  The industry feels that a mix of short-term and long-term steps are needed to steer the industry out of the present crisis. Currently, the industry is being cautious to slow down a little to wait for the tide to turn, he added. Meanwhile, Dinesh Navadiya, president, Surat Diamond Association, said, “The downfall in import of rough diamonds will not be so much. As per the present scenario in the diamond and jewellery market, the decline is expected to be around 4% to 5%.” The main reason behind this downfall is the availability of more stock than required with the manufacturers of diamonds and jewellery and the manufacturers of diamond and jewellery will try to first clear their existing stock before jumping to new production, he opined. On the diamond industry meeting in Mumbai on Tuesday, where a decision on ‘strict production discipline’ was said to have been taken, the SDA president said, “Discipline in production as per the discussion in meeting on Tuesday is necessary to maintain the price of the polished diamonds.” On the referendum seeking ban on import of rough diamonds into India, he said, “According to me, the reason behind seeking such referendum is to bring the prices of rough diamonds down by the miners.” In an earlier conversation with The Dollar Business, the GJEPC had said that lower costs of importing roughs through the Special Notified Zones (SNZ) established in India is anticipated to benefit the Indian G&J industry hugely in the coming years. Nevertheless, the future of the Indian G&J industry looks bright with the operationalisation of SNZ in BDB, Mumbai, it opined. According to the Council, taking the slow growth of global economy into consideration, any growth or a slight dip is expected in the exports of G&J in 2016 and during 2014-15, G&J exports accounted for $39.91 billion. Besides, the Council also informed about organizing India Pavilion at various International Jewellery shows like JCK Las Vegas, Basel World, Hong Kong International Jewellery Show, and Vicenzaro Dubai, apart from organizing India International Jewellery Show and Signature IIJS annually. GJEPC has also been organizing regular Buyer-seller Meets (BSMs) with potential markets including the recently concluded Colored Gemstones Buyer-Seller Meets in Panyu, China, and INDO-USA Business Development Conference.    

July 8, 2015 | 6:37 pm IST.