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13 july 2020

vipul_shah_xx.pngMr. Vipul P Shah, Vice Chairman, GJEPC and also CEO & Managing Director of Asian Star Co. Ltd. has a rich experience in the diamond industry. His business acumen and professional conduct have contributed significantly in transforming a diamond manufacturing company to a value-added, vertically integrated business. He has been instrumental in establishing the company’s jewellery business and global distribution network, currently one of the best in the industry. Under his leadership and guidance, the company has attained the status of being one of India’s leading diamantaires.

Besides, he has been pro-active in supporting all activities to promote the Indian Diamond Industry, which brought him to the position of the Chairman of GJEPC from October 2012 to September 2015 wherein a host of initiatives were carried out under his leadership for the growth of exports and advancement of Indian gems and jewellery across the world. In this interview given to Rough&Polished Vipul P Shah covers a range of questions regarding the current situation in the global diamond industry.

How has the situation with coronavirus affected the diamond industry in India and when do you expect the diamond factories to open completely?

As coronavirus has affected the entire world including our major exporting countries like China, the USA, and the Middle East, there is limited demand for gems and jewellery. Manufacturing activities in India were stopped during the countrywide lockdown period.

Gem & jewellery gross exports during the financial year 2020 declined by 10.9% to US$ 35.53 billion as compared to US$ 39.56 billion in Financial year 2019.

During the April-May 2020, in value terms, gem & jewellery exports declined by 84% to US$ 572 million as compared to USD 3.51 billion during April-May 2019.

Although factories and units have started functioning with limited capacity, it is very difficult to say when factories will become fully operational as the number of COVID cases are increasing drastically on a daily basis.

How did the COVID-19 pandemic affect diamond markets worldwide, and especially in the United States?

The outbreak of COVID-19 led to a fall in demand from major diamond consuming markets like USA, European Union and China. Due to COVID, productions were stalled, supply chain and markets were disrupted. However, currently in the USA the market sentiment is improving as the New York dealer market gains some momentum. Orders coming in at reduced levels. Buyers require melee for bridal collections and noted rising interest in lower-priced engagement rings.

Can you provide any data on the export of diamonds from India by countries?

India’s Exports of Cut & Polished Diamonds to different markets 


Do you expect a drop in diamond jewelry consumption in the US and China?

There was pent-up demand in China post COVID-19 and the USA market is also expected to revive in later part of 2020. Trade shows cancelled earlier due to pandemic are also now taking place through virtual platforms mid this year. This would help gain momentum and drive the jewellery business in the market.

What can you say about the consumption of diamonds in the domestic market of India?

Primarily, India is a gold-consuming nation, with over 800 tonnes consumed annually. Consumers spend on jewellery as a form of investment here. It will be more so during such a crisis and post pandemic. The consumption of diamonds in India had will be less compared to the last few years.

Will GJEPC participate in diamond and jewelry promotion and marketing programs both in India and abroad?

GJEPC will focus on demand generation for diamonds and jewellery in the next two years and will sustain its promotional efforts across focused target markets and emerging markets. The initiatives will include Virtual BSM, International trade fair participation, focused delegations, brand India campaigns, direct marketing programmes, PR to name a few.

GJEPC has also partnered with Diamond Producers Association (DPA), now known as the Natural Diamond Council for promotion of diamond jewellery in markets of USA, China and India.

India market contributes 29% to global jewellery consumption, considering the vast expanse and potential of the market, Council would undertake few marketing programs in the region.

What are you doing to overcome the lack of liquidity in the country’s diamond industry? Will Indian banks work to provide additional credit lines to diamond manufacturers?

The Coordination Committee (CoC) was set up by the Ministry of Commerce to understand the challenges and issues related to credit and finance in the gems and jewellery sector. The CoC was part of an effort to seek solutions and create a greater understanding among all stakeholders. The CoC has conducted seven meetings in the past two years, and discussed issues related to credit and insurance, and has achieved a reasonable degree of success.

Taking into account the cases of fraud against Indian banks and their wary attitude to the industry, how will the policy of the Indian state banks develop to support the cutting and jewelry industries in the country? Your thoughts, please.

GJEPC has taken a series of self-regulation measures, including the introduction of MYKYC Platform which has brought further transparency and addressed relevant risks. The afore mentioned CoC was also part of our efforts to raise the confidence level of banks in our industry.

When do you expect the Indian industry to resume regular rough imports?

Currently, we have requested members to voluntarily curtail imports between 10th July to 31 July 2020. However, we would review the situation in the last week of July before taking any decision. 

When will Indian diamond manufacturing factories start operating at full capacity?

Diamond units have started functioning with limited capacity, however it is very difficult to say when these units will become fully operational as the number of COVID positive cases are increasing drastically on a daily basis. 

How is the Special Notified Zone (SNZ) in Mumbai operating these days and what are the plans for its further development?

The Special Notified Zone (SNZ) has been conducting diamond viewing session successfully, but due to COVID-19 Diamond viewing session has been stopped since March 2020.  

GJEPC has proposed to the Govt. for direct sale of rough diamonds by miners in Special Notified Zones (SNZs) in India. Currently, rough diamonds are sent to SNZs by miners for viewing in the country, post which diamonds are shipped back to Dubai or Antwerp by SNZ.  Sales aren’t permitted, and if they do, it comes under the Permanent Entities as per the IT Act, and attracts income tax on the sale. The same goods are then shipped back to India via offices in Dubai or Antwerp, thus increasing costs for the importer. As much as 60% of the rough is routed through Antwerp or Dubai. 

The Council has requested the Govt. that if customers in India choose to confirm their orders, an invoice can be made within the SNZ. Miners could pay a “turnover tax” not exceeding 0.16% (the prevailing rate in Belgium). 

What will be your forecast for 2020 for the Indian diamond industry?

It is expected that there would be drastic decline in cut and polished diamond exports. Exports of cut and polished diamonds in the month of April/May 2020 has shown a decline of 79%   to US$ 389.07 million as compared to USD 1867.65 million in the same period last year. Considering the current scenario, it would take some time for the world and trade to regain normalcy. Thus, exports may be expected to decline by 60 to 70% in FY 2020.

Aruna Gaitonde and Vladimir Malakhov, Rough&Polished