Weaker rupee seems to have failed to bring cheers to diamond exporters. Despite the rupee falling to an all-time low, diamond exporters in Surat see no significant gains as there is no demand in the diamond market at present.
Though the fall in the rupee value against the dollar translates into better returns for exporters, but the recent decline is unlikely to help diamond exporters. There has been a sharp decline in the demand of cut and polished diamond in the global markets due to financial turmoil in the US, said Pravin Nanavati, former president of Surat Diamond Association (SDA).
“Rupee fell to an all time low of 50 last week against the dollar. However, diamond exporters may not be in a position to leverage from weaker rupee as the demand for cut and polished diamonds have declined by around 15-20 per cent. Further, the sales of luxurious items have also been hit due to the global financial crisis,” said Chandrakant Sanghvi, Regional Convener for Gujarat, Gems and Jewellery Export Promotion Council (GJEPC).
In the wake of slowdown, diamond buyers demand cut and polished diamonds at lower rates and they have also scaled down the size of the orders placed by them. “Margins are under pressure as the cost of rough diamonds have increased. Many diamond units are said to have brought down the work force,” said Pravin Nanavati.
It may be mentioned that US is the largest market for diamonds and jewellery. It accounts for 28 per cent of the total gems and jewellery exports from India last year. Also, diamonds cut and polished in Surat are routed to US through various other parts of the world such as Dubai, Hong Kong, Thailand and Israel.
At a time when demand for cut and polished diamonds is declining, surge in the value of dollar might have adverse impact as international buyers may further cut their orders, Surat diamond traders said. This year, Surat diamond industry announced an early Diwali vacation due to less demand.