A visitor to the India International Jewellery Show (IIJS 2013) in Mumbai earlier this month may have been baffled at the opulence and grandeur that he saw all around. More so after the recent crisis like the weakening rupee, gold crisis, rough shortage, government restrictions, stocks and shares of jewellery companies sliding down and a host of other woes faced by the gem and jewellery industry. But right from Day One, footfalls told another story and gave a mixed message about the industry. Such overwhelmingly massive crowd was not seen in any other B2B jewellery show in recent times. The 5-day India International Jewellery Show, touted as Asia’s second largest B2B jewellery exhibition, was spread across 46,000 sq meters at the Bombay Convention Centre, Goregaon in Mumbai, with around 1,800 booths occupied by 800 odd exhibitors from India and overseas. More than 35,000 visitors attending this 30th edition of IIJS and according to data from the Gem & Jewellery Export Promotion Council (GJEPC) of India, there has been a 25 percent increase y-o-y in the number of visitors.
Also, this year several international delegations from China, UAE, UK, Russia, Japan, Poland, Pakistan and a few other countries were present. IIJS has developed into an important trading and networking platform for the global gems and jewellery industry and a preferred jewellery sourcing centre for jewellery connoisseurs. The Indian manufacturers showcased their best, whether it was in design, quality or innovation. The best of craftsmanship combined with technology was all out there on show, impressing even regular visitors who have seen it all. Jewellery and coloured stones from the multi-culture States of India turned the IIJS a brand in its own right, into a microcosm of the country.
And for those who found the infrastructure at the Show lacking in order may also notice that with the available facilities, The Gem & Jewellery Export Promotion Council (GJEPC) had done a pretty good job. However, the long overdue Exhibition Centre promised by the Chief Minister at the inauguration function, is an urgent need and will be welcomed by the Indian Gem & Jewellery industry if expedited by the Maharashtra government. The IIJS is slated for this time of the year so as not to clash with other major shows around the world. In addition, the time is just right for the local as well as overseas buyers to do their purchases for the coming festival seasons, be it Diwali or Christmas.
Rounding up the Show, one gets the perception that jewellery sections did very well, whether it is plain gold, colour stone or diamond studded jewellery. At the loose stones arena - especially the diamond section - business was rather sluggish. Given the market condition, trading was quite steady throughout and genuine buyers were looking for goods. Most of the diamond traders reported that demand for loose stones was not as much as they anticipated. But some traders already anticipated low demand at the Show. They were pleasantly surprised as stars and melees found some movement but it was the larger stones that had more demand, especially from overseas buyers. The domestic buyers were rather reluctant to make a deal, given the current market condition. If the asking price was high, the buyers (local and overseas) too where in the mood to bargain for a better deal. The high rough price situation in India may have played havoc in deals being closed at the Show. But analysts, who are not quick at giving up, see the loose diamond deals at the Show as not over at the Show. The usual after-show meetings between suppliers and buyers in the offices may give a different picture. According to them, many suppliers may also compromise on the price to see deals through, given the competition, liquidity problem, cash crunch and an unsure future. Most overseas as well as local buyers were asking for higher discounts as the sellers’ asking prices were way above the buyers’ offer, leading to a situation when sellers had to compromise to close deals.
Given the current conditions in the diamond market, some diamonds traders seem to have participated just for visibility and were in the Show with low expectations. So, the low demand for loose diamonds may not have come as a surprise for the diamond traders. Surely, difficult times need different measures to overcome hurdles. A loose diamond trader with a rather innovative buy-back offer found many interested buyers at the Show. If at all there was any good demand, it was for high quality 1-3 carat rounds from overseas buyers. There was demand for fancy shaped goods too like princess, pear and heart shaped ....all of which are in short supply in the market. Cheaper goods in stars and melees were also not available though demand was there. This is because many manufacturers have stopped manufacturing those goods. Suppliers too were holding on to their goods as they cannot reduce prices, given that price levels were influenced by the rupee. But many polished dealers managed to close deals by lowering their prices slightly on older inventory which have gained much due to rupee depreciation. According to an analyst, there was no panic selling at the Show despite the current market conditions... an indication that the Indian market has matured over the years to a strong stabilized market.
The jewellery manufacturers, on the other hand, did good business as they received very good enquiries from the domestic market as well as overseas buyers. All varieties of jewellery found buyers whether it was coloured stone, gold or diamond-studded in all price points. The domestic buyers looked for light weight gold jewellery as well as diamond studded jewellery from entry level price points to high end goods. The domestic jewellery consumers, even the hardcore gold jewellery lovers who are particular at the value for money while making their purchases, were beginning to look at diamond studded jewellery. This is the trend making waves in recent times in the Indian market for various reasons. The high gold price may be the prime reason, but interest in diamonds as investment is gradually picking up in India, albeit slowly. Of course, gold jewellery lovers still remain loyal to their metal, high prices notwithstanding. So, both gold and diamond jewellery runs parallel now in the consumers’ radar. This has inducing some ‘pure gold jewellers’ to present themselves in the market as also ‘diamond jewellers.’ Some have taken the middle road by projecting themselves as ‘gold & diamond jewellers’ and some have converted themselves totally to ‘diamond jewellers’... depending on where they were situated like 2 tier cities or 1 tier and large Metro cities. So, local buyers at the IIJS booked orders as per the places they came from, which varied from State to State ; as well as whether they were from cities, metros or rural areas.
As in the previous years, it is not unusual for the IIJS Show to showcase India’s finest jewellery. The buzz word was ‘innovation’, with exhibiting jewellery manufacturers having gone out of the way to show their new designs. The couture jewellers, in particular, were at their creative best to present some never-seen-one-of-a kind designs; and tried to stay away from the run-of-the-mill jewellery which every second jeweller presents at every jewellery Show. As mentioned before, majority of the local visitors showed more interest in gold jewellery especially tier 2 cities and rural areas were looking for traditional designs but light weight jewellery. With the current price of gold, this trend was not a surprise. Anticipating high demand in this category, the manufacturer – exhibitors had sufficient designs to satiate the needs of the buyers. In fact, a large number of jewellery manufacturers were ready with State and culture specific goods making it easy for the buyers to make purchase decisions. Heavy Indian traditional designs, bridal sets which are always in demand had good demand. Demand for Temple jewellery was sensational as well with demand for religious artifacts coming right behind. Analysts, however, put this trend of Indian consumers towards reaching to gold because diamond traders are facing difficulties globally as well as in India. Besides, the political atmosphere in the country before the general elections, a weakening rupee and volatile stock market is the reason for this cautious behaviour of the consumers in general.
All said and done, there were not as many overseas buyers at the Show as one expects it to be. Instead, in the past few years it is noticed that IIJS is turning out to be a major sourcing event for the local/domestic retailers. However, among those limited international buyers present, some showed interest in Indian designs, especially those from countries with more Indian population. Other International markets buyers went mostly diamond studded jewellery and entry level gold jewellery that were designed especially for the overseas market. The Show as always had many other Indian and overseas showcasing their machinery and innovative Italian goldsmith technology, wide range of high-tech Italian equipment that had many jewellery manufacturers were seen taking keen interest in them.
Market analysts see the market forces at play and blame them for all the woes faced by small diamond manufacturers, who claim that they are now slowly getting into pure trading activities. By purchasing polished goods from larger manufacturers rather than manufacturing diamonds themselves, many incurred costs are saved and makes more business sense for them. High rough prices, working capital funding etc., is not conducive for the small manufacturers to remain in the sector and survive. Larger factories are able to stay afloat by sheer economics and financial strength. But even bigger companies, for which rough prices may be stable, have to compromise on prices at a minimum level, as there is no increase in polished prices.
Market watchers attribute the cautious mood in the IIJS Show as a reflection of the weak rupee, sluggish real estate/property market and volatile stock market. In addition, with the 2014 election coming up, the government being under pressure to reduce the country’s large current account deficit and therefore the restriction on gold imports. While some sections of the gem & jewellery industry members are crying hoarse on curbs on gold imports, the government did what it had to do.... raised import duty on gold from 6 to 8 in June; and again recently to 10 percent. The jewellery exporters have however been given concessions as they are exporting the gold jewellery that brings in foreign currency. Latest press reports on the ‘India International Gold Convention’ (Aug. 16th to 18th, 2013) in Jaipur, India claimed that the gold imports into India has been completely stopped, presumably for domestic consumption. Obviously, this would hurt the domestic gold market as 60 percent of gold imports are consumed by the domestic market. But, the country comes first and hence the Reserve Bank of India (RBI) curbs. Interestingly, according to RBI, gold imports alone accounted for 80 percent of the deficit.
At the IIJS Show, many voiced their opinions that noted that gold import restrictions have also impacted local demand besides increase of gold smuggling into the country. The recent cases in the apprehended at the international airport correlate this fear but steps are being taken by the authorities to tackle the menace.
The gem and jewellery industry in India is one of the most pampered industries in India as compared to any other industries. As major players in the industry are export oriented and bring in the much needed foreign exchange, the Government of India had in the past and also continues to formulate very supportive regulations for the industry. The time has now come for the industry to exercise restraint and help set the CAD right by the governing authorities.
The annual event preceding the IIJS is the India International Jewellery Week (IIJW), which creates great interest among one and all, what with Bollywood present in full strength throughout the Show. For the uninitiated, Bollywood is the Indian Film industry largely based in Mumbai. An initiative by the GJEPC, IIJW was conceptualised to showcase India’s finest in jewellery. So like in the past, Grand Hyatt Hotel saw the who’s who of the Indian G&J industry, complimented by celebrities from India’s film fraternity. Every year IIJW also attempts to provide an international platform to India’s leading designers as well as budding designers to show their wares to the world jewellery market. This persistent attempt by the GJEPC has resulted in establishing India as the most preferred destination for quality jewellery sourcing.
Aruna Gaitonde, Rough&Polished, Mumbai
