Rapaport International Diamond Conference Highlights Regulatory, Price Challenges

The Rapaport International Diamond Conference 2012 held in Mumbai on August 29, 2012 attracted over 300 participants, including many of India’s leading diamantaires, according to press release by Rapaport. The conference was inaugurated by Mumbai’s Commissioner of Customs Shri P.M. Saleem.‎
The morning session highlighted India’s new regulatory environment, which will require compliance procedures that the industry is not yet ready to perform. The new laws governing transfer pricing, service tax and cross border investments are becoming increasingly burdensome. Martin Rapaport, Chairman of the Rapaport Group, cautioned companies and warned foreign investors that India’s government authorities are targeting the diamond sector. Sanjay Kothari, Vice Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), said that the industry is in talks with senior government officials.
Representatives from the Gemological Institute of America (GIA) and the International Gemological Institute (IGI) presented updates on synthetic diamonds highlighting the difference between natural and synthetic diamonds.
The afternoon session focused on diamond prices and branding. Mr. Rapaport emphasized that diamond prices were beyond the control of the industry and that firms needed to learn how to profit when diamond prices declined. He cautioned India’s diamond industry not to buy rough diamonds at unprofitable price levels and to cease speculative diamond manufacturing that was based upon future polished diamond price increases. The decision by De Beers to lower Diamond Trading Company (DTC) rough prices by about 10 percent at this week’s sight was well received by attendees.
There was a consensus at the conference that prices for better quality diamonds are weak, while prices for inexpensive lower quality round diamonds may have bottomed out. There is relatively strong demand for fancy shapes, especially cushions.
Panelists stressed that branding is the best way to maintain profit margins. Mehul Choksi, Managing Director of Gitanjali Group, highlighted the need for brand differentiation. Vikram Merchant, Manager of Rio Tinto’s India Representative Office, discussed the mining company’s efforts to introduce the Nazraana brand that will create downstream consumer demand for diamond jewelry.
Mr. Rapaport also encouraged diamond manufacturers to separate Marange diamonds from other diamonds not subject to U.S. Office of Foreign Assets Control (OFAC) sanctions.
“The Rapaport International Diamond Conference 2012 exceeded our expectations. New regulatory and compliance requirements will challenge India’s industry. While the outlook for diamond prices is mixed, India will continue to dominate world diamond manufacturing. The medium-to-long term outlook for India remains highly positive as some 100 million emerging middle-class consumers in India, China, and the Far East will fuel increasing diamond demand,” said Martin Rapaport, Chairman of the Rapaport Group.

Tatiana Alexandrova, Rough&Polished, Moscow