The success of the IIJS 2015 brought a sense of well-being back to the industry with trading in the diamond district of Mumbai picking up considerably. The largest show in Asia, the Gem & Jewellery Export Promotion Council‘s (GJEPC) 32nd Edition of the India International Jewellery Show (IIJS), was unexpectedly a major success, given the global slowdown. Chief Guest, Mrs. Rita A. Teaotia, Commerce Secretary, Minister of Commerce & Industry, Government of India, in her speech, praised the Indian gem and jewellery industry’s strong fundamentals, which was evident from the performance and resilience that the sector has shown over a period of time. Prior to the IIJS, the 6th India International Jewellery Week (IIJW) opened at the Grand Hyatt in Mumbai with the usual glamour the event is associated with over the years.
But of course, during the next few weeks or so into the month, the eruption of violence in Surat came as a spoilt sport, curtailing the manufacturing sector to an extent. But, not an industry to fail under such stress, the diamond industry bounced back to normalcy, as the month of August came to an end. Polished manufacturing is in full swing as of now. With De Beers reducing prices by 10 percent in its last Sight, manufacturers may be looking to other diamond producers to follow suit. According to sources, ALROSA did no such thing but reduced the supply in an effort to create a balance in the industry. The market expected that the polished diamond prices may see changes due to the rough price reduction in the following days.
According to sources, many buyers from consuming centres especially US, were in the market for their annual Christmas purchases. Buyers from other countries like China and Japan were also seen in good numbers, looking for polished goods. But market sources claim that due to the problems in the Asian financial market and payment delays faced recently from Chinese buyers, some Indian companies are wary of making deals on long credit terms.
During the month, demand from the domestic market was steady as well, given that the festival season has already begun. Stars and melees were in high demand as entry-level diamond jewellery sales has seen continuous improvement in all towns and cities across India. Demand for fancy shapes of all sizes and quality are in the increase, indicating a changing Indian consumer preference. Caraters also were in demand, as the wedding season approaches. All in all, there is good market sentiments in the Indian market. The domestic jewellery sector too is in an upbeat mood with retailers looking for a big leap in the oncoming Diwali sales.
The wedding and festive season ahead is expected to bring healthy prospects for the Indian domestic jewellery market. In addition, India has a natural affinity to gold and its role within the household economy cannot be underestimated.
The stabilizing of gold prices at lower levels in both the domestic and international markets has advanced both seasonal and festive jewellery demand by over a month in India. Many retailers have already reported a rise of 25-30 per cent in sales over the past five days, according to media reports. Jewellery consumers, in fact, have a double benefit as jewellers, assuming it would be a lean season, announced heavy discounts in making charges. Customers are reportedly taking advantage of both, the price fall and discount.
The Indian diamond industry, which was just about reviving and getting on to the fast track, was unfortunately stopped , albeit temporarily, in its tracks due to rallies and violence in Surat, during the month of August. Due to eruption of violence by Patidar community members on in Surat during the month, the diamond business was hit adversely resulting in heavy losses.
The downslide in the country’s diamond trade continues as can be seen in the provisional figures for the month of July 2015 announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India recently’ The cut and polished exports for July ’15 declined by 18.3 percent recording $1512.74 million as against $1852.48 million in July ’14. Rough imports recorded $1092.76 million for July ’15 as against $1912.46 million in July’14, registering a decline of 43 percent. Rough exports showed a decline, registering $59.2 million for July ’15 as against $140.38 million for July’14, a decline of 57.8 percent. Polished diamond imports recorded $266.9 million for July ‘15 as against $634 million for July ‘14, showing a decrease of 58 percent.
In an effort to use the raw material (rough diamond) produced for the benefit of its local citizens, the government of the Indian state Madhya Pradesh (MP) has reportedly decided to set up a Diamond Park Project under PPP (Public Private Partnership) mode in its commercial capital of Indore. The diamond park will be set up at Rangwasa village, in which a Special Economic Zone (SEZ) will be developed on 134.2 acres and domestic manufacturing facilities will be established on the remaining 120.03 acres.
Gold smuggling into India has reduced considerably over the years. Of late, a fall in premium on gold amid softening demand has led to decline in smuggling this year. The industry estimates demand this year to slide to an expected 150 tonnes compared to 200 tonnes last year. P. R. Somasundaram, managing director, World Gold Council India said that illegal imports have come down dramatically this year.
The Government of India raised the import tariff value on gold to US$ 363 per 10 grams and silver to US$ 499 per kg on 18th Aug., taking strong cues from the global market. For the first fortnight of this month, the import tariff value of gold and silver stood at US$ 354 per 10 grams and US$ 498 per kg, respectively. The government raised the tariff value of imported gold and silver marginally taking into account the rise in global prices.
On the release of ISO International Standard 18323: Jewellery - Consumer confidence in the diamond industry, Gem and Jewellery Export Promotion Council (GJEPC) of India along with Bharat Diamond Bourse(BDB) & Gem and Jewellery Federation (GJF) praised the organization. The ISO Standard provides a series of definitions which aim to provide further clarity for traders and to maintain consumer confidence in the diamond industry as a whole.
When WGC released a study, “Developing Indian Hallmarking – A roadmap for future growth”, gold jewellery hallmarking centres in India have questioned the authenticity of World Gold Council (WGC)’s data on hallmarked jewellery in India.
Good news first…at an event organized by the Associated Chambers of Commerce of India (Assocham) in New Delhi recently, France Morule, High Commissioner of South Africa in India invited Indian companies to invest in SA and set up jewellery manufacturing units in the country. Also, reports came in that the 3rd India Diamond Week organised by The Gem & Jewellery Export Promotion Council (GJEPC) in association with the Diamond Dealer Club, New York opened on Aug 24 – 27, 2015 was well received and a success… more details later on this.
The Gems and Jewellery Export Promotion Council (GJEPC) proposed that India should create separate tariff codes and duties for natural and synthetic diamonds. The GJEPC had already submitted the proposal to India's commerce ministry and the industry looks forward for the government to act on it at the earliest.
The Brihan Mumbai Nagarpalika (Municipal Corporation of Greater Mumbai) has conveyed to The Gem & Jewellery Export Promotion Council (GJEPC) through a letter dated 3, Aug 2015, that a Bank Guarantee will be accepted against octroi on gold imported for manufacture of jewellery for export purposes, within the limits of Greater Mumbai, reports gjepc.org.
In an announcement, Gemological Science International (GSI), one of the world’s leading gemological labs claims that it is the first and the only laboratory in India to begin batch testing for star and melee sized diamonds using the latest state of the art technology.
But, some very unfortunate incidents did happen during the month. But, corrective steps have to be taken; and in a step to safeguard the diamond industry, the Surat Diamond Association (SDA) recently terminated the membership of a diamond manufacturer who is accused of selling undisclosed synthetic diamonds to the diamond merchants. Secondly, Cristy Gems, a Surat-based diamond manufacturer was barred by Gemological Institute of America (GIA) recently for fraudulent report inscription. The lab has also announced that it will not accept diamonds for grading from the company any more.
In another case, Bharat Diamond Bourse (BDB) suspends members suspected of undisclosed synthetics trading. In a notification to its members, the Bharat Diamond Bourse (BDB) has reportedly advised its members to follow certain rules, mentioning the names of individuals connected to a company VSM Diamonds Private Limited.
Indian jewellery chains have been on a growth race in recent times, be in expanding in India or overseas. Kalyan Jewellers, one of the top Indian jewellery chain, is set to launch its e-commerce operations very soon. Rajesh Exports, the world's largest gold jewellery maker, said the company has bagged an export order worth around US$ 179 million from an UAE-based company for gold and diamond-studded jewellery and medallions.
But, the last Q1 being a slow period, many Indian companies have reported negative growth in business. Titan’s revenue for Q1 this fiscal drops 6%; jewellery income down 11%. Tanishq, India’s leading jewellery retailer’s income has declined 11 percent for Q1 this fiscal according to Titan Company Ltd, its parent company. Revenue for Q1 FY 2015-16 which ended June 30th 2015, fell to US$419.8 million from US$445.8 million made in the same period of the previous financial year. Tribhovandas Bhimji Zaveri Limited (TBZ) India’s jewellery retailer reported its unaudited and reviewed results and financial performance for the first quarter of 2016 financial year. The total income from operations during Q1FY16 declined by 3.80% YoY to US$ 65 million.
Aruna Gaitonde, Editor-in-Chief of Asian Bureau, Rough & Polished
