The Indian diamond market was fairly active with brisk trading during the month of October, due to the oncoming festival and wedding seasons. The improved trading in polished stones can be attributed to the good number of overseas buyers from US, China, Israel and others, making their rounds just before the Indian market closes for Diwali vacations. Good demand was reported for 20 pointers to caraters of good colour and make during the month.
But towards the last week of the month production in the cutting centres was reduced leading to shortage of polished stones. Buyers, overseas and domestic, tried to get good discounts as they understood that traders were attempting to reduce their inventory of the last few months. On the other hand, some sellers were making good deals with buyers with firm orders. Trading in rough was rather slow as manufacturing will be put on hold for the next 2 plus weeks.
The provisional figures of Sep. 2015, announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India, mirrored the earlier months. India’s Sept. cut and polished exports declined by 28 percent recording $1.9 billion as against $2.66 billion in Sept. ’14. Rough imports recorded $1.05 billion for Sept. ’15 as against $1.5 billion in Sept.’14, registering a decline of 30 percent. Rough exports showed a decline of 55.5 percent, registering $67.28 million for Sept. ’15 as against $151 million for Sept.’14.
The fact that De Beers and ALROSA, the two leading diamond companies in the world, kept rough prices stable in October by cutting prices by 8 to 10 percent in the third quarter brought some relief to the Indian sector, which was hit hard by almost no profits. De Beers also decided to let its diamond buyers to defer their full November allocations until December as the market remains soft. Sightholders in India now expect prices from both the major miners to remain relatively stable until the end of the year.
The Indian government is taking all steps to support the industry. Commerce Secretary (Government of India) Ms. Rita Teaotia recently announced that the government had decided to increase the allocations for export incentive schemes in the current financial year from the earlier $2773 million to $ 3235 million; and this amount was likely to be available for allocations in the nearest time. She also said that the suggestions received from the EPCs will be crystallized in a concrete form and specific actions would be taken by the Ministry to facilitate exporters.
The month saw a change of guards at the Gem & Jewellery Export Promotion Council of India. Praveenshankar Pandya of Revashankar Gems was elected Chairman of the GJEPC while Russell Mehta, CEO of Rosy Blue (India) Pvt. Ltd is the Vice Chairperson. Pandya has suggested to the Indian government a few policy changes that could help the current problems faced by the gem & jewellery industry. Introduction of Presumptive Taxation for the diamond sector; speedy resolution of taxation issues with regard to the SNZ in Mumbai; implementation of single window system for all clearances in SEZs were some of the suggestions.
Meanwhile, good news came from the Ministry of Finance, Government of India on 16th Oct. that it had decided to exempt income from display of rough diamonds within a SNZ from the provisions of the Income-tax Act, 1961 with effect from April 1, 2015. The legislative amendment to the act will be carried out subsequently… a step that will boost the miners in a positive manner. Some of the mining companies have announced intentions of their auction sales business and the viewing is planned to be held at the Special Notified Zone (SNZ) in Mumbai from 27th November.
Towards to end of the month, GJEPC and the Bharat Diamond Bourse (BDB) hosted a delegation from Botswana, led by its Vice President, Mokgweetsi Eric Keabetswe Masisi on October 26th 2015, at the Bourse Complex in Mumbai. While India is looking for rough supply from Botswana, Botswana may be looking for Indian investors to open manufacturing units in Botswana…mutual help is the way to go.
To keep control on synthetic diamonds influx into the trading areas of natural diamonds, the Bharat Diamond Bourse (BDB) in Mumbai banned the trade in synthetic diamonds effective October 1. While the Indian diamond sector is not averse to synthetic diamonds as another product to be declared and marketed, it is totally against unscrupulous people mixing them with natural diamonds, thus disgracing the industry’s name. Unfortunately, the Indian industry had to face another embarrassment recently when GIA invalidated 1,042 grading reports after computer hackers penetrate system and altered data. The GIA announced that two former employees of Tata Consultancy Services (TCS) are in custody in connection with the case.
When India launches the scheme on November 5, about 100 hallmarking centers would be ready for all required facilities and license from the Bureau of Indian Standards. The success of the GMS depends upon infrastructure of these CPTCs. But how far this scheme will be a success, only time can tell.
According to GFMS Gold Survey Q3 2015 Review and Outlook, India is the leading global consumer for gold in the nine months of 2015, at 642 tonnes of gold consumption in the period. This makes India surpass China in the category, which consumed 579 tonnes, as per the survey, reports say. The report says that in the three months ending September 30th, 2015, India’s gold consumption was up 5 percent on year on year basis to around 193 tonnes, which is the highest quarterly consumption since the March quarter of 2011 and the highest third quarter demand since 2008.
Gold mining sector is miniscule in India, despite the country being the largest consumer of gold in the world. This scenario is set to change in the future with the Indian government’s changing policies. In a first, Indian state Chhattisgarh’s government is all set to publicly auction the state's only known gold mine, Baghmara, for mining operations much on the lines of coal block auctions. Tenders for the auction are all set to be floated in November and the company selected for the purpose would be issued licenses both for prospecting and mining of gold.
Demand for gold in India continues unabated and smuggling gold from various countries has been rampant for ages. It is reported that maximum of gold smuggled into India is from Dubai and Singapore due to the price differentiation.
The domestic jewellery market in India now looks forward for good Diwali sales. Showrooms are already decorated in all the grandeur associated with the festival. Discounts, Schemes galore are publicized to woo the discerning customer for Dhanteras, which marks the beginning of Diwali, when it is considered auspicious to purchase precious jewellery.
Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished
