The Indian diamond industry was fairly active, given that the preparation for the IIJS 2016 was in full swing throughout the month of July. With both the JCK Las Vegas as well as the HongKong June Show was below expectations for the Indians, they were looking forward for their own country’s major Show IIJS 2016.
According to market watchers, polished prices in India has softened due to high inventory levels in the Surat and other smaller cutting centres. Rough prices too are said to have declined in the secondary market. To reduce inventory and improve cash flow, manufacturers are said to have offered heavy discounts.
India’s cut & polished diamond exports for June 2016 amounted to $1.846 bn as against $1.853 bn in June ’15, a drop of 0.38 percent, according to provisional data announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India. Rough imports recorded a drop of 20.21 percent to $ 1.20 bn for June ’16 as against $ 1.50 bn in June ’15. Rough exports showed an increase of 26.59 percent, registering $129.74 mn for June ‘16 as against $102.49 mn for June ‘15. For the month of June ’16, cut & polished diamonds imported increased by 5.16 percent, recording about $252.31 mn as against $239.93 mn in June ’15. A correction of sorts happening in the Indian industry… a step to consolidate and effect a price correction of polished goods.
In a first, a stir resulted in the Indian industry when an amount of $715000, which was wire transferred by the GJEPC to the JCK show organizer’s bank account in US was reported not traceable. Cyber-crime cell of Mumbai police, CBI and ministry of finance had been intimated. The bank is investigating on its part to trace the money wire transferred to the US account.
To mention a more constructive event, the leaders of the Indian gem & jewellery industry gathered in New Delhi recently to felicitate Prime Minister Narendra Modi. During the event, the industry members asked for reduction of gold import duty to 5 per cent besides other demands.
Gold sector request seems legitimate going by the performance of the sector over the years. Even in the latest data from GJEPC, the overall exports from the gem and jewellery sector during June 2016 stood at US$ 3.51 billion, a growth of 4.03 per cent over the US$ 3.37 billion exported in the same month the previous year. Gold jewellery exports for June 2016 rose by 27.24 per cent to US$ 769.09 mn as against US$ 604.43 mn a year earlier.
However, physical demand for gold in India has struggled this year amid high prices and a running dispute with the government over new taxes and proposed reforms to the industry. India consumed almost 1,000 mt of gold in 2015, but with gold bar imports at only around 215 tons so far this year, just under half the 2015 level, many are expecting a much lower total for full-year 2016.
But a sense of relief came over the jewellery industry when the Finance Ministry of India on 13 July, said no excise audit will be carried out for the first two years for units whose duty payment is less than $0.15mn (that is turnover of manufactured goods less than $15.03 mn). The government has also decided, independent of committee's recommendations, to increase for jewellery manufacturers "the SSI eligibility limit from $1.80 mn to $2.25mn and the SSI exemption limit from $0.90mn to $1.5mn in a financial year and $0.12mn for the month of March, 2016". Small mercies indeed…
Self-help is the best help and who else but the Indians to know that the Gemmological Institute of India (GII) - a GJEPC project co-sponsored by Bharat Diamond Bourse (BDB) - has introduced a new instrument which detects synthetic diamonds in a few seconds. The instrument, named as "Quick-Check", has been designed by the in-house research team of the Gemmological Institute of India and Arotek. India is one of the largest hubs for diamond processing and this initiative will build more confidence in the industry.
The Indian government’s gold monetisation scheme (GMS) is slowly picking up steam as can gauged by official data which claims that 3,000 kg of gold has been deposited under the Temples in India trust. The Tirumula Tirupati Devasthanam being the top contributor, depositing 1,311 kg of gold with Punjab National Bank in April. The GMS aims to mobilise around 20,000 tonnes of idle gold lying in the country by encouraging institutions and people to deposit it with the government and earn interest on it.
Will India’s rough imports show an increase this year, given the slow demand for polished goods in overseas consuming markets? One has to wait and see, but for the present India is the largest importer of rough in terms of volume, according to the Annual Global Summary report of the trade in rough diamonds in 2015 published by the Kimberley Process Certification Scheme (KPCS). India has recorded a 37.77% share in global rough imports in 2015, which is slightly up from 37.55% in 2014. However, in value terms the country’s share rose to 31.69% in 2015 as against 30.40% in 2014.
India wants to be self-sufficient with regards to raw material for the gem & jewellery industry. Though the diamond project of Rio Tinto has been deferred due to environmental issues, the industry hopes gold and other minerals mining will get a boost from the government. The new National Mineral Exploration Policy (NMEP) by the government, was for the acceleration of exploration activity in the country, through enhanced participation of the private sector. Estimated budgetary expenditure for implementation of the policy has been pegged at about $ 319 mn over five years, over and above the annual plan budget of the Geological Survey of India under the Ministry of Mines.
The domestic jewellery sector did fairly well during the month of July but not as expected, which can be attributed to the high gold prices. Tanishq brand of Indian company Titan of Tata Group registered improvement in sales. During the quarter, Titan opened five Tanishq stores and closed two Gold Plus stores.
Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished
