The Indian diamond industry was on a slow track during the month of April. Demand from overseas buyers, as well as local demand was much lower than the earlier months, but the quiet market is attributed to the off-season during this part of the year.
April began with low trading in polished as well as rough diamonds. Tight liquidity and low profit margins were the bane of dealers as well as manufacturers, which is the cause of concern for the whole industry. De Beers’s sight during the month was estimated to be $500M as buyers refused more than 30% due to high prices. Sightholders claim that there is oversupply of rough diamonds at high prices, when the period indicates weak or flat polished demand. According to them, mining companies should lower rough prices, so that manufacturers make some reasonable profit and sustain their business.
During the month, polished prices stabilised relatively, following price corrections but dealers remained cautious. Miners kept rough prices high, but sold less goods. ALROSA, for instance, kept rough prices higher by 2% to 3% at the April sale, while allowing deferrals up to 40%. This was easy on the pockets of rough buyers, who are already weighed down by liquidity problems.
Reflecting the downturn in overseas markets, the provisional figures announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India indicated that India’s cut and polished exports for Mar’15 registered a decrease of 10.37 percent recording $ 1749.38 million as against $ 1951.76 million during Mar ’14. Rough exports showed a decline of 6.5 percent registering $155.52 million for Mar ’15 as against $ 183.77 million for Mar.14. Rough imports recorded $ 1452.61 million for Mar ’15 from $ 1415.54 million for Mar ‘14, indicating an increase of 2.62 percent. However, polished diamond imports recorded $ 500.14 million for Mar. ‘15 as against $789.12 million for Mar. ‘14, showing a decrease of 36.62 percent due to steps taken by the government to curb polished imports.
Still, despite the hurdles, India went about with its promotional activities as usual. Focusing on the strategic interests of India’s gemstone and jewellery sector in the Middle East, the Gem & Jewellery Export promotion Council of India (GJEPC) collaborated with VicenzaOro Dubai as an associate partner for the event. The India Pavilion showcased 96 leading manufacturers and retailers spread across 200 booths. They displayed an extensive array of diamonds, gemstones and finished jewellery developed specially for visitors of VicenzaOro Dubai. GJEPC’s “India Evening” in association with VicenzaOro Dubai on April 25 at the Jumeirah Beach Hotel hosted buyers visiting the fair, dignitaries and was reportedly a big hit.
Keeping in line with the efforts put forward by many institutions to educate and induct people into the industry, Gemological Science International (GSI), one of the largest independently owned gemological laboratories in the world, conducted a training session in association with Parinay Jewellery at Trivandrum, India. The agenda included a presentation on jewellery cleaning with a live demonstration, questions-and-answers period and a practical workshop on viewing diamond jewellery.
When it comes to the future of the gold jewellery sector, India can be rest assured, as its peoples’ love for the yellow metal is here to stay. The medium to long-term prospects of Indian gold jewellery industry looks bright, suggests the latest study report published by Investment Information & Credit Rating Agency (ICRA), a renowned credit rating agency. Gold jewellery sector in the country is said to be poised to grow well at 8-10 percent over medium to long term. Organized gold retailers are likely to post moderate improvement in same store sales growth and revenues. ICRA forecasts that organized retailers may gain more market share through penetration into Tier-II and Tier-III rural markets, which currently are dominated by unorganized players. Improving demand prospects in rural India will lead to better sales and profitability for these companies.
So, all is not lost as predicted by observers when ABN Amro closed business in India. Media reports mentioned that ABN Amro has agreed to transfer diamond and jewellery activities in India to IndusInd Bank Limited. Furthermore, ABN AMRO and IndusInd Bank agreed to enter into a partner banking agreement to continue to cooperate in diamond and jewellery activities in the country.
Erik Jens, the CEO of diamond and jewellery clients at ABN Amro, said, "IndusInd Bank Limited is a strong and stable partner for our Indian clients. We are, therefore, pleased with today’s announcement. ABN Amro remains committed to its activities in the diamond and jewellery business and to working with IndusInd Bank on the partner bank agreement." This news brought some cheer to the Indian diamond industry as banks have become tight-fisted with regard to diamond financing.
In a first, the Responsible Jewellery Council (RJC) held its Annual General Meeting (AGM) in Mumbai. The Gem and Jewellery Export Promotion Council (GJEPC) and Bharat Diamond Bourse (BDB) joined the RJC as co-hosts to present India’s diamond and jewellery industry to a global audience during this major event. The events highlighted how the Indian manufacturing sector has significantly benefited from an industry-led global compliance standard like the RJC to meet export market expectations as well as to retain skilled workers as a way of improving quality and productivity.
All steps are taken by the Indian industry to counter the mixing of ‘synthetic’ diamonds with natural diamonds by a few black sheep. The Diamond Detection and Resource Center (DDRC), a GJEPC - IDI (Indian Diamond Institute) initiative, was inaugurated by senior ministers of the Gujarat government, Saurabhbhai Patel, Hon'ble Minster of Finance, Energy, Petro Chemicals & Mines, Tourism, Cottage & Salt Industry and Nanubhai Vanani, Hon'ble Minister of Sports, Youth Culture Activities, Water & Education. The DDRC project has been conceptualised by the Natural Diamond Monitoring Committee (NDMC) launched jointly by GJEPC, MDMA, BDB and GJF.
The proposed ‘Special Notified Zones’ (SNZs) is slowly but surely taking shape with the Minister for State for Commerce & Industry, Nirmala Sitharaman reiterating the proposal for SNZs and suggesting some other key amendments related to laboratory certification. The Indian industry will now await the details of the proposed policy framework and dates for the SNZ to become operational.
The Indian delegation joined more than 350 members of the Latin American and international diamond, gemstone and jewellery sectors at the Grand Opening of the Panama Diamond Exchange, the anchor organization of the World Jewellery Hub. "We are delighted that so senior a delegation from India will be attending, and most definitely see this as underscoring the significance of our new trading centre in Panama, not only for the business in Latin America, but for the industry worldwide," said Eli Izhakoff, Chairman of the World Jewellery Hub.
The annual preparations have begun already in the Indian Gem & Jewellery Industry, with the Gem & Jewellery Export Promotion Council (GJEPC) announcing its ‘India International Jewellery Show’ (IIJS), which is slated for 6th-10th August 2015. IIJS promises to be the biggest edition in its history with 1100 exhibitors and 2000 booths. The Show will be introducing 200 new booths and 175 new exhibitors, of which 50 companies would be dealing in studded jewellery, 70 companies in plain gold jewellery and 50 companies in loose stones.
Major retailers from the South of India especially are making inroads into the Middle East countries, which happen to be populated by Indians in great numbers. Bhima Jewellers open its first international outlet in Dubai. One of the oldest jewellery chains from Kerala, Bhima Jewellers, will invest nearly Dh300 million to set up a chain of retail outlets in the UAE and other Gulf countries. Bhima Jewellers’ first showroom will be opened in Karama Centre, Dubai, to be followed by branching out to all the seven emirates.
In India, the largest consumer of gold in the world, platinum was always viewed as the rarest of rare metals due to its high price, but over the years, import and availability of platinum increased, leading to availability of platinum jewellery in the Indian market. Now platinum jewellery pieces are widely available. In recent months, with price of gold hitting the roof and platinum becoming cheaper than gold, demand for platinum jewellery has shot up by 40-50%, particularly in February and March. The market information shows that platinum price in India is currently hovering around $420 per 10 gram as compared to gold price of around $425 per 10 gram. This trend is likely to continue in the upcoming wedding season that kicked off this month. In India, the young and the educated are the main consumers of platinum jewellery as they are Internet savvy and are aware of global fashion trends. The middle class jewellery lovers are also looking at platinum.
The country’s economy seems to be looking up of late, as indicated by Moody’s Investors Service and Fitch Ratings boosted its growth forecast, signaling optimism that policy makers can improve Asia’s No. 3 economy. The country’s BAA3 rating was affirmed and the outlook was revised from stable, Moody’s said in a statement, while Fitch affirmed India’s BBB- rating with a stable outlook. Both companies rate India at the lowest investment grade, on par with Indonesia and Turkey. Does this augur well for the diamond and jewellery sector in India? It sure does...
If gold does not come to you, you go to gold, seems to be Indian jewellers’ intention of late. Indian company Rajesh Exports Ltd has announced plans to make major investments in Australian gold assets by investing up to $700 million in purchasing Australian gold mines and opening gold retail stores in the country. According to Rajesh Mehta, owner of Rajesh Exports Ltd, the company intends to make physical presence in Australia by setting up subsidiary unit in Melbourne. It will acquire stake in the country’s gold mines in order to ensure reliable and uninterrupted gold supply chains to cater to its needs.
De Beers Group does not leave any stone unturned to promote their Group’s activities. It opened the newest and most technologically advanced Forevermark diamond inscription and grading operation in the world - the International Institute of Diamond Grading and Inscription in Surat, India. The facility, by virtue of a $10 million De Beers investment, 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.
April saw the auspicious ‘Akshaya Tritiya’ festival boost the premium for gold in the domestic market. Demand pushed premiums to around US$7-8. The festival, which is considered as one of the most auspicious periods of the year to gift gold, witnessed high sales throughout the country.
Aruna Gaitonde, Editor in Chief of the Indian Bureau, Rough&Polished
