Didier Giard: Stiff competition among the diamantaires is one of the factors of the price war

On September 9, 2019, the French Association of Gemmology (l’Association Française de Gemmologie, AFG) held its regular Paris Gemmological Rendez-Vous. Its organizer, Didier Giar, the head of the AFG kindly agreed to answer questions from Rough&Polished...

16 september 2019

“The industry is under some pressure, and as we all know, diamonds are formed under great pressure!”, says Dr Martin Leake

A veteran in the field of precious stones, Dr Martin Leake a doctorate geologist had worked for 22 years with BHP Billiton; and also set up a world-class marketing unit for Grib Diamonds in Antwerp. Later, as an Independent Consultant, Dr Martin Leake...

09 september 2019

Recovery of diamond industry within a year if end-consumer demand holds – Zimnisky

An independent diamond industry analyst and consultant said the natural diamond industry will be in a better position within a year time if end-consumer demand holds. Paul Zimnisky, CFA told Rough & Polished’s Mathew Nyaungwa in an exclusive interview...

02 september 2019

Working according to one’s weaknesses and strengths

Canon Jhaveri grew up watching his diamond-dealer father and uncle working with diamonds. The sparkles of the diamonds fascinated the young boy, who became more intrigued every time he visited his father’s office. After graduating in 2002, Canon Jhaveri...

26 august 2019

The diamond business is yet bright and has a good future in the coming days

Hitesh Patel, Managing Director of Dharmanandan Diamonds Pvt. Ltd., joined the family business in 1997 to help his father Laljibhai Patel, the founder of Dharmanandan Diamonds Pvt. Ltd. Egged on by its success, Hitesh set up the overseas presence of...

19 august 2019

What ails the Indian diamond industry?

25 january 2016

Looking back at the past few months of the Indian diamond industry’s export performance, one notices a continuous downslide… a free fall, if you will. For the month of July ’15 diamond exports declined by 18.34 percent recording $ 1512.74 million as against $ 1852.48 million in July ’14; in Aug. ’15, it declined by 8.43 percent recording $ 1755.46 million as against $ 1917.17 million in Aug. ’14; in Sept. ’15, it declined by 27.87 percent recording $ 1922.57 million as against $ 2665.52 million in Sept. ’14; and in Oct ’15, it declined by 17.10 percent, registering $ 1839 million as against $ 2218.81 million in Oct. ’14…and this trend threatens to continue in the next few months.

According to the Gem & Jewellery Export Promotion Council of India (GJEPC), the whole gem and jewellery industry of the country is going through its worst times. It felt that India was losing out on the exports and its leadership position in the global market. In addition, the unemployment rate in the industry was increasing to a great instance, especially in the cutting and polishing sector which was a worrisome aspect for the industry.

But, it is the diamond industry in particular which was bearing the brunt of the current massive downturn in the China, Eurozone and other consuming markets globally, severely impacting the demand and prices of polished diamonds and finished jewellery. India is loaded with huge inventories of polished goods at present. And due to sluggish overseas demand and strong rough diamond prices, the Indian industry is not realizing any profit in the business, for a prolonged period of time. Indian manufacturers feel that the ripple effect was bound to be felt as the market has never seen such a slowdown before.  China was the only growth market in the last five years.

In a first, the Indian manufacturers are refusing to buy rough high prices as polished prices are stagnant and not correlating with the rise in rough prices. And with very high inventory, they do not see business sense in buying rough at present, which in any case is highly priced. For the first time, the import of rough diamonds figures has shown huge decline of around 26% during April-September 2015-16, in comparison to the same period last year. However, the Oct. 2015 figures showed an increase to $ 1072.73 million as against $ 935 million in Oct.’14, registering an increase of 14.61 percent… an indication that the cutting centre is slowly going back on track.

The depressing scenario, during the past few months in the cutting and polishing sector, has resulted in erosion of capital base of many small and medium diamantaires. Also, it is believed that, the stones in inventory too got downgraded; and acute liquidity problems and unemployment was the outcome.

India's situation is becoming unique and more serious than other trading centres as in the global diamond industry. While India employs around 800,000 skilled labour workmen; China employs around 20,000, while in Israel, Belgium, US, Botswana or South Africa, there are 600 to 3,000 workers. If manufacturing is cut due to rough problems, it hits India far more severely than other cutting centres. While dealing with wafer thin or no profits on one hand, many of the Indian diamantaires' are in a dilemma regarding their work force. They are not able to retain workers nor fire them, as they are tied to their moral obligations for their labour force.

In the recent months, the Indian diamond industry saw the combination of high rough prices and sluggish global demand create an inventory pile up to such an extent that polished prices fell by around 15%. Many small and medium enterprises were compelled to close their business operations due to sluggish sales resulting in high inventory cost of the unsold polished goods.

The Indian diamond industry players are of the opinion that the diamond sector has been losing its competitive edge in the diamond trading segment to emerging global hubs like Dubai and China. Also, they feel that Indian industry losing out to the existing hubs of Antwerp and Israel because of high interest costs and unstable taxation policies of the Indian Government. Rightly enough, the Indian diamond industry points out that the finance abroad is much cheaper than the rupee finance. This makes it further uncompetitive for the India when compared to China, Israel and other manufacturing sectors.

The Indian industry also expects the Indian government to introduce a Presumptive Taxation regime for the diamond industry to ensure “ease of doing business”. Also, implementing it will result in simplification of the direct tax laws for diamonds, which has no standard input-output ratios and rationalization of assessments. According to Praveen Shankar Pandya, chairman, GJEPC, India’s jewellery export orders currently is just about 75 per cent of the normal. He added that the US has shown little sign of recovery and orders from other parts of the world are weak. The GJEPC has asked the government to help the jewellery industry with an interest subvention scheme. In two months, the Indian jewellers need to offload three months of extra inventory in the global markets. According to Pandya, this inventory carries costs bearing which Indian exporters will be unable to compete against players in Belgium and China.

The recent reports that overseas orders for Indian jewellery have declined by 25 per cent for the Christmas season has brought down the morale of the industry players. It is understood that Indian jewellery manufacturers were looking forward for strong Christmas sales on reports of a revival of economic sentiment in the US. The US market is a consumer of around a third of global jewellery production, to which nearly 40 per cent is contributed by India. The slowdown in jewellery demand overseas has reflected in exports, which recorded $18.09 billion during April-October from $22.15 billion in the same period last year, a decline of 13 per cent.

Will the sparkle return to the Indian diamond industry soon? That’s a million-dollar question…

Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished