In the past, the resilient Indian diamond industry has survived many hurdles and has bounced back like the phoenix. At present too, despite a slowdown in consumer markets like Europe, the Middle East and others, the industry is totally geared up to cater to larger markets like the United States and China. Demand from the Middle East, too, has begun to show signs of improving, with high demand in terms of finished goods (diamond jewellery).The post Signature IIJS period has been rather fruitful for the industry as overseas buyers, especially from Hong Kong, have arrived in large numbers to Mumbai, making Bandra Kurla Complex (which houses the Bharat diamond Bourse, as well as many diamond firms) now look like mini-China.
Though the month of March started off rather slowly, trading picked up quickly and is currently in full swing in the diamond district of Mumbai as the demand from domestic market is improving due to the marriage season and Akshaya Tritiya next month. Stars and melees are in very good demand, while stones up to 3 carats are in steady demand for export, as well as for the local market. Demand for fancy diamonds is stable, but only for good makes. Production, which was rather slow during the beginning of the month is slowly picking up as inventory of polished goods is depleting. Shortage of some high-end goods is reported.
Rough trading is currently not as active as expected due to the De Beers sight, which has overloaded the market with goods. Besides, being the financial year-end, liquidity is tight in the market, which is already reeling with liquidity problems.
If the previous month’s performance of the industry as announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India is anything to go by, the increase of 4.36 percent registering $2.3 billion (3.03 million carats) as against $2.2 billion (3.33 million carats) during Feb ’14 is a major consolation, given the global slowdown. However, rough imports recorded $1.1 billion (11.37 million carats) for Feb.’15 from $1.4 billion (13.50 million carats) for Feb ‘14, indicating a decrease of 23 percent. Rough exports showed a decline of 22 percent registering $87.7 million (2.26 million carats) for Feb ’15 as against $112.6 million (2.74 million carats) for Feb.14. The Indian government has been taking many steps to curb polished diamond imports in support of the local cutting and polishing industry and this was reflected during the month of February. Polished diamond imports recorded $405 million for Feb ‘15 as against $478 million for Feb. ‘14, registered a decrease of 15 percent, which is a good improvement from past months.
The rough requirement in the country’s cutting and polishing sector is a major concern, and many steps are being taken to source rough directly from mining companies. Locally too, diamond projects have been started but stalled - the National Mineral Development Corporation Limited (NMDC Limited), a Government of India Enterprise is one such project. NMDC Chairman and Managing Director Narendra Kothari revealed that besides enhancing its diamond mining activities, NMDC has also applied for a few more prospecting licenses in MP. "Regarding Panna, we have got instructions to submit our closure plan as we have to shut down the mines by June 2016. Initially we had permission to mine up to 2020, but then some disputes occurred. Hence, we have decided to approach the Supreme Court again seeking permission to mine there till 2020 without harming the environment,” said Kothari. Local production might ease India’s rough requirement to a small extent, but it will also ease its total dependence on outside sources.
Rio Tinto, a global mining giant, is making its position in India stronger. It has started its world-first Analytics Excellence Centre in India, to improve equipment productivity across its global operations. The Centre will assess massive volumes of data captured by the array of sensors attached to Rio Tinto’s fixed and mobile equipment and enable experts to predict and prevent engine breakdowns and other downtime events, significantly boosting productivity and safety. Rio Tinto has partnered with IGATE to develop the Analytics Excellence Centre. The Centre is the latest phase of Rio Tinto’s Mine of the Future™ programme, which is dedicated to finding advanced ways of improving safety and productivity.
The Indian diamond industry as well as the gem and jewellery industry on the whole was rather disappointed with India’s Union Budget 2015-16 as it failed to address major areas. Besides the proposal to develop sovereign gold bond; Gold Monetisation Scheme to benefit gold finance companies; introduce India made gold coins, which will help recycle gold available in the country, nothing much was offered to the industry. Some of the other critical matters that should have been addressed are simplification of the process for direct sourcing of roughs, introduction of a turnover-based Income Taxation System and an exclusive and separate duty structure for natural and man-made diamonds. Reduction of import duty on gold, which would have helped to control the issue of illegal trading on gold, was also ignored.
The Surat cutting and polished industry has been quick in absorbing newest technology, which is the main reason for its success. Sahajanand Technologies Pvt. Ltd. (STPL), a Surat-based company, has been a partner to the cutting industry’s progress over the years. The company received the I-Mark for ‘Industrial Equipment’ for its product ‘Magnus Digital’, an advanced rough diamond planner. The company now has the distinction of being the first company associated with the Indian diamond industry to have received the I-Mark from the India Design Mark.
I-Mark is granted by India Design Mark of the India Design Council - a statutory body, established by the Government of India, functioning under the aegis of the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry. It awards the I-Mark in conjunction with the Japan Institute of Design Promotion (JDP).
The month end saw the De Beers Group of Companies open the newest and most technologically advanced Forevermark diamond inscription and grading operation in the world - the International Institute of Diamond Grading and Inscription facility in Surat, India. The facility, a $10 million investment by De Beers, has been equipped with leading proprietary diamond technology. Its primary purpose will be to select and inscribe Forevermark diamonds with the unique serial number that symbolises the Forevermark promise; and to deliver an accurate and reliable grading service for Forevermark diamonds. At full capacity, the facility will be able to process $500 million worth of diamonds annually.
‘Catch ‘em young’ goes the saying and the International Gemological Institute (IGI) took it up seriously by organizing a special children-oriented seminar – “Young Gemologists” – for the students of Oberoi International School in Mumbai, aimed at familiarizing young aspirants with the world of gemology.
Drawing participation from more than 100 students ages 10 to 14, in different groups, the hands-on workshop provided an enriching platform to learn gemology principles and attain in-depth knowledge on origin, formation, composition and value of gemstones. The participants were individually guided by IGI faculty and exposed to several varieties of colors in gemstones. According to IGI faculty, the children were “mesmerized” when given a chance to witness these gems and minerals in various colors and sizes and actively participated in a quiz that followed the workshop.
Slowly but surely, platinum seems to be making a strong mark in the Indian psyche.
Demand for platinum jewellery is supposedly currently zooming in the Indian market as platinum becomes cheaper than gold. Platinum jewellery retailers said that in February and March, demand shot up 20-25 per cent and this trend is likely to continue in the upcoming wedding season. According to retailers, younger clients are educated, net savvy and aware of global trends. Platinum is being viewed as the next generation metal. Young Indians are seeking options in jewellery metals and designs, and are willing to experiment with new styles.
Gold is back to its hey days again in India. From winning back the ‘top consumer tag’ of gold in the world from China, India saw the premium for gold gradually picking up during the month, more so with demand looking up ahead of the annual Akshaya Tritiya festival in April. Akshaya Tritiya is fast approaching and the festival is considered as one of the most auspicious periods of the year to gift gold. It is estimated that more than 60 tonnes of gold may have entered the country during March after 55 tonnes in February, to support pre-festival demand.
The Indian government notified that the ‘sovereign gold bonds’ ( announced in the Union Budget) will be made attractive to savers with the twin benefits of a likely price appreciation of the metal and a nominal interest rate of 1-2 per cent. It is estimated that anything between US$ 3,703 million and US$ 7,400 million could be mobilised annually as financial savings through this new instrument. Gold bonds will carry a fixed rate of interest and would be redeemable in cash at the price of gold at the time of redemption. The sovereign gold bonds will be sold through post offices and banks to reach out to the maximum number of retail investors. In a physical gold loving country like India, it is left to see if this instrument will be a success or not...
Luxury jewellers are setting up more shops in India to make the most of the huge future potential in the country. Cartier, the luxury jewellery and watchmaker, which currently has a boutique in New Delhi, is considering a second boutique in India. The company is looking for the right business model. "India is a very important market and we have Indian customers throughout the world. Right now, however, the market is still at early stages of development," said Laurent Gaborit, regional managing director for Middle East, India and Africa. “But given the population, wealth and success stories, there is a lot of potential,” he added.
The All India Gems and Jewellery Trade Federation (GJF), the apex body of the retail jewellery trade, has urged the government to withdraw its decision in making it mandatory for every consumer who purchases jewellery worth $ 1,595 and above to provide PAN Card details (Permanent Account Number). India has a huge rural population that sees gold as an investment vehicle, but may not have PAN cards.
It seems that there is no stopping Indian based jewellers from spreading their wings in overseas markets. Malabar Gold & Diamonds opened its latest outlet at Lulu Hypermarket in Jubail on March 15. This is the new launch as the group’s 129th outlet globally, 49th in the Middle East and 8th in the country. The company started its international operations in the year 2008 with the opening of a single outlet in Sharjah. Today, the group operates 51 stores across the Middle East and Far East markets. Another retail giant, Joyalukkas, the global jewellery chain, opened their new jewellery showroom in Jubail, KSA recently. With presence across ten countries around the world including Kingdom of Saudi Arabia, Bahrain, UAE, Kuwait, Qatar, Oman, Singapore, London, Malaysia and India, the Joyalukkas chain is renowned for offering unlimited choices of breathtaking jewellery at each of their showrooms.
The online retailing space is getting crowded nowadays - the recent company to enter the space is the Indian PC Jeweller Ltd, which has signed an exclusive collaboration agreement with Blue Nile Inc, a leading online jeweller in the US. PC Jeweller is into manufacturing, retailing, and exporting gold, diamond and silver jewellery. The company has a pan-India jewellery retail chain with a focus on diamond and gold jewellery. It went public a little over two years ago. PC Jeweller currently has more than 50 showrooms across 42 cities in 17 states. On the other hand, Blue Nile (founded in 1999) is one of the largest online retailers of diamonds and offers engagement rings, wedding rings and fine jewellery. The company competes with traditional jewellery stores such as Tiffany & Co and online retailer stores such as James Allen, Belgium Diamonds and Angel City Jewelers.
Aruna Gaitonde, Editor in Chief of the Indian Bureau, Rough&Polished
