Year 2015 started off on a good note for the Indian diamond industry, which was still revelling in the partnership struck with ALROSA during the previous month when 12 contracts were signed by leading industry players, renewals and new.
Trading in the diamond district of Mumbai picked up gusto with overseas buyers seen in plenty from main consumer markets. Melees and stars were in high demand, especially of better quality goods. Caraters in fancies stones were in good demand as well though shortage of goods was felt in the market. However, overall business was good during the month and plenty of orders were placed as traders tried to offload the inventory of the previous month. Manufacturers concentrated more on production of ‘smalls’ due to demand for such goods from US.
Of late, the Indian markets struggle with liquidity is an ongoing process with trading getting restricted for a many manufacturers and dealers. Continued liquidity problems is attributed to less availability of finance as well as delays in overseas payments.
With price correction becoming effective, trading was rather stable in the Indian diamond market. Indian industry may see a more stabilized situation in the coming years as it focuses on sourcing rough from multiple producers. As ALROSA and Rio Tinto have become major suppliers of rough directly to the Indian industry, a price correction will take place. De Beers January Sight with an estimated value of $450 million was rather small which reflected a softening of prices in the rough market and overall rough diamond prices declined by about 4 percent and this scenario is expected to continue for next few months till market stabilizes.
The Gem & Jewellery Export Promotion Council (GJEPC) of India data revealed that India’s cut and polished exports for month of December 2014 registered a marginal decrease of 0.03 percent to $ 1,451.75 million (1.982 million carats) as against $ 1,452.20 million (2.04 million carats) during December 2013. Polished diamond imports recorded $ 441.56 million for December 2014 as against $ 380.40 million for December 2013, showing an increase due to excessive imports by Mumbai DTA importers, despite the Government’s strictures. Rough imports recorded $ 1,431.18 million (14.06 million carats) for December 2014 from $ 1,652.53 million (17.18 million carats) for December 2013, indicating a decrease of 13.39 percent. Performance figures for the month of Jan.2015 promises to be better with overseas consuming markets opening up, and economies growing for the better.
The mining scenario in the country will see better days too in the future as Pranab Mukherjee, President of India, recently signed an ordinance amending mining laws that aims to swing a sector constrained by 50-year-old laws allowing for considerable discretion, into an era of transparency and greater investments. Projects such as Rio Tinto's Bunder Diamond mine in Madhya Pradesh can now transition from prospecting to mining lease without waiting for the state to recommend its case, provided they have properly prospected the area and have no violations. Also, India will henceforth offer a prospecting-cum-mining lease through auctions.
Partnerships with countries around the world is ‘trending’ in the business circles as India goes out of its way to work with other countries for mutual benefit. The Government of Gujarat (India) will soon train 50 young South Africans for a 6-month diamond polishing session in Surat, following signing of a memorandum of understanding (MoU) with the South African government. The South African Government is also planning a joint venture with Gujarat where the skills of Surat and the rough diamonds of South Africa can be brought together for mutual benefit.
In a renewed effort, Rio Tinto has reportedly announced its plans to invest $500 million in the Bunder diamond project, while it waits for environment approvals from the Indian authorities before starting the project. Speaking at the World Diamond Conference in Delhi, Rio Tinto Diamonds managing director Jean-Marc Lieberherr said: "Our partnership with the Indian diamond industry is a 30-year journey that covers everything from diamond manufacturing technology to unique market development initiatives and the first diamond discovery in India in decades. Development of our Bunder diamond project in Madhya Pradesh is a natural continuation of the partnership model and would put India among the top 10 diamond producing countries in the world”.
Partnership between India and Russia is bound to grow further as India supports the development of direct contracts which would bypass the European mediators. ALROSA is likely to continue to pick Indian partners for direct diamond sales as Belgian companies, with Indian assets, are the major buyers of rough from ALROSA, which is ultimately shipped back to India for manufacture.
Keeping up with the trend, Venus Jewel announced that Mahiar Borhanjoo, who was the Executive Sales Director and Senior Vice President of Sales at De Beers has decided to join the group as the Managing Director of Venus Jewel International. Another kind of ‘partnership’...
The All India Gems and Jewellery Trade Federation (GJF), has urged the Union Finance Minister to bring down the import duty on gold from 10% to 2%; a comprehensive gold mining policy that encourages domestic exploration; and to encourage the Government to stimulate enhanced recycling schemes for idle gold among others.
The Indian coloured stone sector got a boost from the ‘China Coloured Gems Buyer-Seller Meet’ at the Shawan Jewelry Industrial Park at Panyu, Guangzhou of China, which was organised by GJEPC. With this Meet, it is hoped that it will go a long way in forging trade relations and seeing stronger business alliances established between the two countries.
The Indian Prime Minister Narendra Modi met the three leading trade bodies - Gem and Jewellery Export Promotion Council (GJEPC), All India Gems and Jewellery Federation (GJF) and India Bullion and Jewellery Association (IBJA) to deliberate on ‘Make in India’ initiative by the Government. Make in India’ programme, which is well received by the industry, aims to boost India’s manufacturing sector as it is a major sector for economic growth
Import of gold by India is always in the news in relation to CAD, but gold bar imports during December 2014 registered a sharp decline over the previous year, according to GJEPC.
The total gold bar imports by the country during December ‘14 amounted to $204.3 million, a decline of 47.8 percent as against $391.7 million during December 2013. The decline is due to weak retailer gold demand and high volatility in prices. Meanwhile, currently Indian families are increasingly banking on household gold to meet the bridal jewellery demand for the upcoming wedding season. This is likely to bring down the country’s import by 73% to 40 tonnes in January ‘15 against 151 tonnes in November last year.
It is estimated that about 22,000 tonnes of gold is locked up in Indian households.
Franchisee is the new route taken by even the biggest of ‘branded jewellers’ in India. Prompted by the volatility in gold prices and erosion of margins, this trend which began a few years ago, is a strategic turn followed by the likes of Mumbai based TBZ (Tribhovandas Bhimji Zaveri), Rajesh Exports, Gitanjali Group, PN Gadgil Jewellers and others. Higher rentals, which push up the operational cost is also the reasons for choosing the franchisee route by jewellers.
Despite the domestic market players crying hoarse about thin margins and other hurdles faced by them, most of the companies are doing pretty well for themselves. India’s Titan Company Ltd has reported a growth of 9.4% in income for Q3 FY 2014-15 compared to the same period last year and an impressive income growth of 16% for the nine month period ended December 2014. Titan’s overall income in the third quarter, Oct-Dec 2014, was US$ 536.72 million as compared to last year’s income of US$ 490.83 million during the same period. The jewellery chain’s ‘Malabar Gold & Diamonds Festival’ in the Gulf Cooperation Council countries and Singapore runs until Jan. 31 in Saudi Arabia and is one of the biggest jewelry events in the GCC. On every purchase of diamond jewelry worth SR 2000 the customers get two gold coins free, besides many other offers. The jewelry chain, which operates 126 retail outlets globally, offers a fabulous collection of gold, diamond and platinum jewelry to suit the tastes of both resident and international customers, skillfully crafted by jewelry specialists from Italy, Singapore, Turkey, Bahrain and India.
The month of January 2015 ended with a joyous event for the Indian gem & jewellery industry. The Chief Guest of the Awards Function, Hon’ble Devendra Fadnavis, Chief Minister of Maharashtra distributed the ‘Awards’ at the India Gem & Jewellery Awards for 2014 (IGJA) organised by GJEPC. Congratulating the winners, the Chief Minister Devendra Fadnavis assured the industry that it will continue to get the government’s support within the State of Maharashtra. A confident Vipul Shah, Chairman, GJEPC looked forward for the guidance of honorable CM, under which the Indian gem and jewellery sector will achieve greater heights.
Aruna Gaitonde, Editor in Chief of the Indian Bureau, Rough&Polished
