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India’s gem and jewellery industry getting back on track

02 november 2020

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Image credit: Star Rays


By July 2020, the COVID-19 pandemic had reached a rather alarming stage in India. And, not surprisingly Surat, the biggest diamond cutting centre of India was badly hit too. So, the city saw a massive exodus of diamond industry workers leaving the city in large numbers. This eventually left most of the diamond units big and small closed, with workers employed in these units leaving the Gujarat city every day, as they were left with no source of income. The Surat Diamond Workers Union President Jaysukh Gajera feared at that time that 70 per cent of the workers who were leaving the city may never come back.

It is reported that more than 9,000 diamond cutting and polishing units in Surat, which remained shut from March-end till the first week of June, employed about 0.6 million people. But, since the business activities resumed in the second week of June, production has been picking up gradually, despite strict precautionary measures like the closure of some units due to COVID-19 infections by the government authorities. Of course, the picture was not promising as there was no stopping the COVID cases which continued to rise. Meanwhile, demand for polished diamonds dipped to an all-time low due to the pandemic. All the consuming centres like US, Hong Kong, EU and other centres reported low demand, putting more pressure on the Indian diamond industry.

But not to be cowed down, the Surat cutting sector ploughed on to continue production of diamonds. However, with demand declining, the Gem & Jewellery Export Promotion Council of India (GJEPC) and other trade bodies suggested voluntary ceasing rough imports to India's diamond companies to stabilise diamond prices. More than 2,000 large and small firms in India cancelled imports and convinced global miners ALROSA and De Beers of the urgency to defer supply and avert panic sale as demand plunged amid Covid-19. This was a step in the right direction and worked immensely well for the Indian diamond industry.

As of early August, the diamond market witnessed some signs of recovery with demand gradually picking up in the US, China and parts of Europe. Diamond cutting and polishing activity too picked up in Surat as Covid-19 cases declined in factories. Pravin Shah, director, Ankit Gems, the Surat-based diamond manufacturing company specialises in One carat + diamonds, said, “We have been operational since May, have demand for emerald, radiant and oval-cut diamonds, and are working at 80% capacity.”

Of the 7,000 diamond manufacturing units, nearly 5,000 small, medium and large units soon became operational. Following government guidelines, the factories were working at 70% capacity. Dinesh Navadiya, regional chairman (Gujarat), Gem & Jewellery Export Promotion Council said that COVID-19 cases in Surat, especially in the diamond sector, have reduced considerably with some factories reporting no new cases in the last two months.

Star Rays, a prominent manufacturer of diamonds between 30 cents and 5 carats began working at 70% capacity. Dilip Mehta, the company’s partner, said: “While the US demand has not reached normal levels, Hong Kong is seeing good demand – 50 to 70-cent diamonds are doing well, and 1-carat-plus are being favoured.” The company’s main export destinations are the US, China and certain parts of Europe.

Soon, diamond exporters are witnessing orders from the US, Hong Kong and parts of Europe for all types of polished goods.

“The upcoming holiday season in western countries would further boost the demand for gems and jewellery,” said Colin Shah, chairman, GJEPC. Sanjay Shah, convenor, diamond panel committee, GJEPC, exuded optimism about the third and fourth quarters of this financial year as orders have come from the US.

India’s cut and polished diamond exports declined 19.60 per cent registering $ 1564 mn during Sept 2020 as against $ 1946 mn exported in Sept 2019. Rough imports during Sept 2020 increased 16.18 per cent to $ 1347.30 mn as compared to $ 1159.63 mn imported during Sept 2019.

So, to boost exports from India, the GJEPC lined up many Virtual Events during the last couple of months, including its flagship event IIJS 2020. The five-day jewellery extravaganza which commenced on Oct 12, 2020 concluded on Oct 16 and has been one of a kind experience for all the exhibitors and visitors. It is estimated that approximately $137 mn business was transacted at IIJS Virtual.

Commenting on the success of the show, Colin Shah, Chairman, GJEPC said, “The past five days of IIJS Virtual have been nothing short of miraculous. We have witnessed IIJS bring the industry out from a pandemic paralysis -- that, too, virtually! The industry realised that one needs to change along with the time and for business sustainability, extensive usage of digital was the need of the hour.”

Also, the first Plain Gold Jewellery Virtual Buyer Seller Meet (VBSM) on 21-24 September, which followed closely on the heels of the successfully held inaugural VBSM for Loose Diamonds during early September was successful too. A Virtual Business Meet on 28th September 2020 to connect jewellery manufacturers from India and leading retailers and wholesalers of UK was organized which was graced by Shri Manish Singh, Minister (Economics) at the Indian High Commission, UK; Rohit Vadhwana, First Secretary (Economics) at the Indian High Commission, the UK along with Colin Shah, Chairman, GJEPC and other GJEPC office bearers.

Shortly, the first Diamond Studded Jewellery Virtual Buyer-Seller Meet is expected to be organised by the GJEPC from 25 - 28 November 2020. Buyers are expected from the UK, the USA, Europe, Australia, New Zealand and Russia. It is reported that many more VBSMs are on the anvil…

Now, the Indian G&J industry is not giving up on its strength. It has seen many ups and downs and has recovered unscathed in the past. With the same resilience the Indian industry is forging ahead. So much so that the Surat's diamond cutting & polishing workers have also decided to forgo their Diwali holidays as polished diamond demand revives.

Nearly 650,000 workers in Surat have decided not to take holiday for Diwali so that they can fulfil the overseas orders for Christmas and New Year on time, as demand has begun to increase from US, UAE and many other consuming countries. The Diamond Workers Union has also asked diamond workers in smaller centres of Saurashtra, Bhavnagar and Amreli to work during Diwali.

Diamond mining companies, ALROSA and De Beers, have also offered support to the Indian industry. ALROSA gave zero buyout obligation to its long-term customers of rough diamonds in the trading session from September 21 to 25 as well as supply contracts through the end of Q1 2021.

“…Against this background, we decided to support our clients and reschedule the regular review of the ALROSA ALLIANCE Member List and product mix to the Q1 2021. This will give our clients a better opportunity to forecast their sales and purchases for the next contract period based on actual market needs,” said Evgeny Agureev, Deputy CEO of ALROSA.

While the government of India has also been supportive to the G&J industry The Union Minister of Commerce & Industry and Railway, Shri Piyush Goyal and Chief Minister of Maharashtra Shri Uddhav Thackeray praised the industry and offered all assistance in the future.

The Indian jewellery exporters, on the other hand, were struggling to fulfil the orders because of a lack of skilled workers, especially in Mumbai, SEEPZ area. The partial opening up of jewellery manufacturing units in SEZs have helped us to execute the pending orders from the pre-COVID period. There was a tremendous shortage of manpower in SEZs and at the moment, working 2-3 shifts is the only answer to bridging the gap between increasing orders and the lack of workers. For the safety of the artisans, safety guidelines set by the Government like sanitizing the units, making sure artisans follow the stringent social distancing protocols were followed.

However, the industry is currently discussing with the Government regarding introduction of Ecommerce policy for the gem and jewellery sector, Priority Sector Status for the sector to bring in operational benefits; reduction in import duty on polished diamonds, and modifications to the Gold Monetisation Scheme and other concerns.

The Indian Government has been very supportive during the COVID phase and has come up with a series of reforms so that the industry could cope up with the current situation. Recently, the Govt. announced an extension of certified diamond re-import period by 3 months, which was a great relief to traders. GJEPC has also proposed direct sale of rough diamonds by miners in Special Notified Zones (SNZs) in India.

At the recently concluded India International Jewellery Show (IIJS) Virtual, retailers were stocking diamond and gold jewellery for the upcoming festive and wedding season. It is estimated that around Rs. 10 billion business was transacted at IIJS Virtual.

Colin Shah, Chairman, GJEPC, said, “In India, sales would be driven by factors like postponed engagements and marriages, festivities and other gifting occasions. Moreover, consumers now have disposable income, which was earlier spent on travelling and vacations. Some of this will get diverted to jewellery.” Sanjay Shah, Convener, Diamond Panel, GJEPC, said, “We are expecting a rise in demand for diamond jewellery in Q4 for the celebratory occasions. Retailers are anticipating that consumers will want to buy diamond jewellery which is unique and can be worn for multiple events."

At the recently held ninth online Forevermark Forum, the company shared some heartening results of research undertaken to assess the mood of the buyer. It revealed that while Indian consumers are cautious about their spending, they have a very strong appreciation for diamonds. It is confident these activities will propel stronger sales for its 100-odd Indian partners.

“We are extremely positive on the future and revival of the diamond industry. The demand will double in the next 4-5 years. In fact, in the post-COVID world, real meaningful things will take precedence where jewellery is the preferred gifting option. Consumers are looking at fewer but better pieces and natural diamonds hold value. We will see a rise in sales soon,” said an optimistic Sachin Jain, President, Forevermark.

The Indian retailers are also happy to cash in on the surge in demand for diamond-studded jewellery in the bridal segment for the upcoming wedding season. Layering chokers with lariats or modular options indicate that young brides are practical and want jewellery that can be worn on other occasions as well. Ajoy Chawla, CEO, Jewellery Division, Titan Company, said that Tanishq is seeing 85% recovery over last year at an overall level and more than 70% recovery on buyer level. Happy with the sales recovery, he believes things will improve.

Suvankar Sen, Executive Director, Senco Gold Ltd., comments, “Consumer sentiments towards diamonds are picking up with time. Initially, it was more of gold but as we move into the festive season, women will look forward to buying diamonds to get out of their anxiety. Both pret wear or bridal, increasing gold prices makes diamond jewellery in 14 -karat more affordable.”

The notion that gold is a safe investment even during the shakiest of economies is true. But Sunil Datwani, Owner, Gehna, reveals that what is truly encouraging for our trade is that purchases of fine jewellery, with diamonds, in particular, have risen rather unexpectedly this year. "Though during the earlier months of the coronavirus surge, fine jewellery sales dipped, they bounced back around August and quickly gained momentum.”

GJEPC chairman Colin Shah stated that manufacturing activities have been back to 89 per cent following all safety measures as per the government guidelines."We are extremely optimistic that in the third and fourth quarters, with orders coming in from the US, Hong Kong, the Middle East and other Asian countries, we slowly and surely will get back to the pre-Covid level, and even on the path of recovery," he said.

GJEPC vice chairman Vipul Shah said COVID-19 is an unprecedented situation that was never faced before and collectively, the gems and jewellery industry has shown that challenge is adding value to the situation. "The industry is making optimum use of digital means to deal on the day to day basis, or the industry has been quick to add up to the new normal. The central government and the state governments have played a crucial role in helping the industry to cope with the situation," he added.

To sum up, one can look forward for the ‘never say die’ Indian G&J industry to move ahead despite the pandemic and return to its robust self-going forward. Aiming to double India's exports of gems and jewellery to $70bn by 2025, the GJEPC has requested the Indian government to institute urgent policy reforms relating to diamonds as well as jewellery.  

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