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July in India: a whole gamut of industry events

07 august 2014

The IIJS took centre stage throughout the month, first half going in preparation and the second half in the thick of things... IIJW & IIJS! The market was slower than anticipated, despite demand from domestic as well as overseas customers picking up due to the coming festival seasons. Trading both in rough and in polished goods continued to be slow as the price corrections are still not being effective. With rough prices shooting up and polished remaining stagnant, the manufacturers / processors are facing massive squeeze in their profit margins.

The IIJS & IIJW concluded on a happy note. The 5-day IIJS 2014 featured over 850 plus exhibitors and 1800 booths from India and overseas, witnessed footfalls of more than 35,000 visitors. As in previous years, a congregation of delegations across India, besides delegations from the UK, Hungary, China, Hong Kong, Uzbekistan, Russia, UAE, Nepal, Myanmar, Iran, Thailand and Bangladesh were present at the show. On display was the widest range of gems and jewels under the categories of Studded Jewellery, Diamonds & Gemstones, Gold & Silver Jewellery, Couture, Allied, Machinery .

The IIJW showcased established design houses and designers and also gave an opportunity to new talented and budding designers from the National Institute of Design and Indian Institute of Gems & Jewellery. The show also featured renowned jewellery houses of international repute besides leading designers. This year, the participants showcased the finest in design, innovation and presented the latest trends and styles.

According to the provisional figures announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India, in June this year, exports of cut and polished diamonds registered $1,469 million (2,695,000 carats), showing a decrease of 0.66 percent against $1,478.81 million (2,806,000 carats) during June 2013.

Imports of rough diamonds rose to $1,595.51 million (12,994,000 carats) for the month of June 2014 from $1,373.16 million (11,658,000 carats) of June 2013, registering a 16.19 percent increase. Polished diamond imports recorded $662.15 million for June 2014 as against $695.31 million for the same month last year, a 4.77 percent decrease. The decrease in imports of polished diamonds is attributed to the Indian government’s steps to curb imports of cut and polished diamonds, which the industry is happy to note.

It was a shot in the arm for the Indian diamond industry, when the Reserve Bank of India (RBI) recently decided, in consultations with the Government of India, that the Clean Credit, i.e. the credit given by a foreign supplier to its Indian customer or buyer, without any Letter of Credit (Suppliers’ Credit) or Letter of Undertaking (Buyers’ Credit) or Fixed Deposits from any Indian financial institution for import of rough, cut and polished diamonds, may be permitted for a period not exceeding 180 days from the date of shipment. This notification from RBI has brought the much-needed relief to the Indian diamond industry, which is currently facing numerous hurdles.

Though the Union Budget-2014 disappointed the Indian gems and Jewellery Industry with no bold reforms, the gems and jewellery industry looks forward for more sops from the government to help the industry grow in the coming months. The industry is happy that the recommendations for rationalization of import duty on broken diamonds and withdrawal of import duty on preforms of semiprecious and precious stones have been accepted. Also the rationalization of import duty on processed diamonds to 2.5% will help the domestic manufacturing sector. However, the jewellery sector is largely disappointed, as the import duty on gold has not been reduced even by 2-3%, which will continue the occurrence of gold smuggling.

Another reason to cheer was the renewed focus on promotion of exports and reviving the SEZs in the country. The GJEPC is in the process of presenting its recommendations for reviving the G & J SEZs in the country and will submit the same to the Government shortly. The Government’s steps to improve the infrastructure for exports in all states by forming an Export Promotion Mission along with the state governments were also welcomed by the industry.

The Indian domestic gems and jewellery trade, however,  was  extremely disappointed with the Union Government’s Budget Proposals as the finance ministry did not consider their plea to reduce the import duty component on gold and also abolish the stringent 80:20 norms. But as they say, life goes on and the gem and jewellery industry looks forward for better days to come with the government looking at their problems sympathetically.

Excitement was caused by building up for the upcoming ‘India Diamond Week - A GJEPC and DDC joint initiative’ in New York from 11th to 14th August 2014. Around 100 diamantaires from the Diamond Dealers Club of New York (DDC) and GJEPC are expected to participate in the meet. The event will provide a platform for the Indian diamantaires in the USA to fortify their business relationship and see networking between major diamond wholesalers / manufacturers from New York and India, DDC members and buyers from other states.

The Government of India‘s proposal to impose a 10 percent import duty on synthetic polished diamonds in order to remove the price differential with natural diamonds was also well received by the industry. As an additional measure to protect consumer interest, a 5 percent import duty on rough synthetic diamonds may also be imposed. The government may also abolish a 2 percent import duty on polished colored gemstones to compete with other international gemstone processing centers like China and Thailand.

In the last few years, many overseas companies have been trying to set up shop in India and watchmaker Swatch is the latest entrant, which proposes to use polished diamonds that are cut in India at its manufacturing plants back in Switzerland. The company plans to spend $10 million over a decade and establish over thirty retail stores in India in the first 5 years.

Indian law requires foreign-based companies selling only a single brand of products to source at least 30 per cent of their resources in India itself. In addition to the melee diamonds, Swatch proposes to purchase from India a whole host of other source materials, such as buckles and pouches as well.

Interestingly, Swatch’s proposal comes when India's Department of Industrial

Policy and Promotion is already in the process of getting rid of the restriction, as many firms from abroad who are interested in setting up shop in the country have identified the regulation as their reason for not doing so. Welcome to India!

The demand/supply situation during the month of July 2014 was as follows:-

POLISHED

Rounds

0.005-0.15 cts, F-J / SI+, selling fairly well

1/5, H-J / VS, good demand, moving well

1/4-3/8, selling well 1/4-3/4, D-J / SI+, shortage of goods

1/2-3/4, white / pique, selling well, less goods in the market

0.80-0.90 cts, selling well; F-J / VVS goods, less goods in the market

1.00-3.00 cts, D-K / SI to pique, selling well, good demand, less goods available

1.00-3.00 cts, H-J / SI1+ high demand for good makes

4.00+ cts, H-M / VS+ selling ok, but less goods available

Fancy Cuts

Emeralds and Stabbes (wide baguettes), 0.25-1.00 cts, good demand D-J / VS+,  selling well

Marquises 0.25-5.00 cts, F-J / VS+, good demand, moving well

Princesses, Pears and Emeralds, 2.00-5.00 cts, good demand for H-K VS, moving well, good demand

ROUGH

Makeables: good demand; shortage of goods

1-5 points: fair demand: makeables; very good demand for OW TTLB & TTLC, shortage of goods

6-20 points: very good demand for crystals/makeables, shortage reported

Fancies:

21-50 points: very good demand, shortage of goods

0.51-1.00 carat: good demand for makeables, crystals.

1.01-2.00 carat: very good demand for rounds, crystals, all fancy shapes, shortage of goods

2.01-3.00 carat: very good demand

5.00 carat+: good demand for $1,000+ makeables, crystals and all fancy shapes

Mixed lot: very good demand

Aruna Gaitonde, Rough&Polished, India