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01 june 2023

Rough imports to India to recover in a few more months

24 august 2020

colin_shah_xxn.jpgWhen Colin Shah took over as Chairman of The Gem and Jewellery Export Promotion Council (GJEPC) of India on 23 June 2020, he already had a successful track record behind him as Vice Chairman of GJEPC. Before this, he served as a member of CoA for the period 2012-2015.

An astute businessman, Colin Shah is the Managing Director of Kama Schachter, one of the top ten manufacturers and exporters of diamond jewellery in Asia.

A recipient of many industry accolades, Colin Shah plays a leadership role in many organizations like SEEPZ Gem and Jewelry Manufacturers Association, the Young President Organization and the Entrepreneurs Organization, besides the Gem & Jewelry Export Promotion Council.

Here, in an Interview with Rough&Polished, Colin Shah speaks about the current challenges times; and the efforts GJEPC intends to initiate for the Indian G&J industry to recover going forward…

Some excerpts:

The Indian G&J industry, on the whole, is going through a rough time due to the pandemic, but what’s the situation now, after the gradual opening up of the manufacturing units, both in the diamond as well as jewellery sector?

The diamond market is seeing signs of improvement, giving stakeholders multiple reasons to be optimistic about the holiday season ahead. As of early August, the diamond market is witnessing some signs of recovery with Demands gradually picking up in the US, China and parts of Europe.

The Indian jewellery exporters are struggling to fulfil the orders because of a lack of skilled workers, especially in Mumbai, SEEPZ area. Similarly, out of the 7,000 small, medium and large diamond manufacturing units in Surat, only half of them are operational. Following the Government guidelines for Covid-19, the factories have been working at 50% capacity.

Was the move, to begin manufacturing activities, a hasty one, considering the COVID-19 was still in the peak in the country? Surat’s cutting and polishing sector seems to be in a dire strait now. Your thoughts?

The decision to restart manufacturing activities was not a hasty one; it was a well-thought-out decision with the units taking all the safety measures set by the Government. Currently, the COVID-19 cases in Surat, especially the diamond sector, have reduced considerably, with some factories reporting no new cases in the last couple of months. Export orders, too, have picked up from Hong Kong, while demand for the US market is rising at a slower pace.

It is said that Indian rough importers are facing financial problems to procure roughs from mining companies. This has forced some miners to reduce prices and even alter their supply terms? How do you think this will impact the whole Indian diamond/jewellery chain… price-wise in the future?

India was already having enough rough diamond inventory to last until the end of 2020. The industry started facing a financial issue as there was no demand for cut & polished inventory in the global market. It was in our collective best interest to preserve diamond inventory values and this was the primary reason that all major trade bodies had requested the diamond industry to voluntarily suspend rough diamond imports from 10th July until the end of the month. However, we have now lifted voluntary rough import ban, but we have urged manufacturers to exercise extreme caution, self-discipline and self-prudence, keeping in mind the uncertain and volatile nature of the pandemic.

Has the partial opening up of the jewellery manufacturing units in SEZs/EOU brought about the requisite positive effect? What is the situation in that front now? What steps are being taken to contain the spread of the COVID-19 virus in the diamond and jewellery manufacturing sector, for the safety of the artisans?

The partial opening up of jewellery manufacturing units in SEZs have helped us to execute the pending orders from the pre-COVID period. There is 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 karigars, we are following the safety guidelines set by the Government, sanitizing the units and have been making sure karigars follow the stringent social distancing protocols.

Once this difficult period is over, has the GJEPC formulated any revival initiatives for the Indian G&J industry with the help of the Indian government, to regain its glory and return to its robust self?

We are working with the Government to bring in a conducive environment for the trading post the COVID period. 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 are some of the concerns we are discussing with the Government.

The 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.

When do you expect the recovery of rough imports to India? And when do you think the Indian diamond manufacturing factories start operating at full capacity?

Rough diamonds will be imported as usual once there is a recovery in demand for cut and polished diamonds globally, and, at the same time, when manufacturers can run their factories at full capacity. All of this should take a few more months.

How is the Special Notified Zone (SNZ) in Mumbai operating these days and what are the plans for its further development? Will the government be obliged to reduce import duty for polished and allow direct sales of rough at SNZs? Your Opinion?

Currently, the viewing sessions are not happening because of the pandemic. Otherwise, it has been running successfully. In a recent meeting with the Finance Minister, we have proposed direct sale of rough diamonds by miners in Special Notified Zones (SNZs) in India. We have requested the Finance Minister 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 other reforms do you think that the Indian government should introduce to facilitate the Indian G&J industry to grow post-COVID-19 and flourish going forward? Your thoughts?

We are expecting the Govt. to introduce eCommerce policy for G&J industry, allow the sale of rough diamonds at SNZ and reduce import duty of cut & polished diamonds.

GJPEC has asked the Indian Govt. for a special package of Rs. 900 Cr which will be utilised for a host of projects undertaken by the Council. This includes Jewellery Park in Mumbai, Gem Bourse in Jaipur, for setting up of Model workshop, Common Facility Centre across India, up-gradation of skill development programs, brand promotion, etc.

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