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India’s rough diamond import might decline 10-15 per cent this year due to dwindling demands from local and overseas markets for polished diamonds. Besides, the decision of the diamond industry, in a meeting on Tuesday, to “strictly follow production discipline” until situations turns favourable will aggravate the fall in demand, feel experts.
The rough diamond import declined 24 per cent in value terms and 13 per cent in volume terms during the April–May period. While in value terms, rough imports stood at $2,693 million between April and May as against $3,528 million in the corresponding period last year.
The trend is unlikely to revive before the Diwali due to perennial lean demand between June and August. The jewellery demand gradually will pick up in September and continue till Christmas and the New Year.
“Definitely, the import is going to decline this year -- but by how much, only time will tell. We have witnessed a sharp decline in rough imports in the first two months. There is definitely cost involved in rough diamond import, which would be borne by individual importer. Since we have decided to follow production discipline, which means import of rough would depend upon jewellery demand. The decline in jewellery demand would proportionately impact import of rough diamond into India,” said Vipul Shah, chairman of Gems and Jewellery Export Promotion Council (GJEPC), under the ministry of commerce.
GJEPC along with diamond industry associations and exporters reviewed the market situation and “unanimously decided to defer the option of voluntary closure or embargo on rough import”, for the time being. “The meeting also saw industry leaders encouraging traders to instead opt for self discipline in import and purchase of rough diamonds based on their inventory and demand for polished diamonds,” said a official release.
“It has been decided not to stop imports completely, but leave it to individual companies. Each unit would follow a strict production discipline and as such imports would come down automatically," he said, adding the diamond polishing units have already cut down on production by about 30 per cent in the past few months,” Shah claimed.
The demand for diamonds is down globally, say diamantaires in Surat, and claim that there is liquidity crunch in the market. "At least 50 units in Surat have shut down temporarily, and about 300-400 units have cut production partially. The situation is grim with retail demand down by at least 40 per cent in the last few months," claimed Kirti Shah, a Surat-based diamond merchant. He further noted that most units in Surat are keeping their units closed for two-three days a week and have cut down on daily work hours.
It is estimated that Surat, which accounts for nearly 80-90 per cent India's diamond polishing, imports nearly Rs 2 lakh crore worth rough diamonds in a year. The major exporters in Surat are mulling to stop imports for a month or two.
Shah said the industry representatives have already had a meeting with commerce ministry officials and are in regular touch with the Centre on the issue. "We are asking the government to give interest subvention to the industry to help the traders tide over the crisis. There is already huge inventory in the market," Shah said.
A committee of leading diamond traders would be formed who would review the situation and suggest future course of action.
Besides, the diamond industry is reeling under frequent defaults of payments. In the last one month, defaults worth about Rs 700 crore have been reported in Surat, and the industry pegs the cumulative defaults value in a year-and-a-half to be around Rs 2,000 crore.
The rough diamond import declined 24 per cent in value terms and 13 per cent in volume terms during the April–May period. While in value terms, rough imports stood at $2,693 million between April and May as against $3,528 million in the corresponding period last year.
The trend is unlikely to revive before the Diwali due to perennial lean demand between June and August. The jewellery demand gradually will pick up in September and continue till Christmas and the New Year.
“Definitely, the import is going to decline this year -- but by how much, only time will tell. We have witnessed a sharp decline in rough imports in the first two months. There is definitely cost involved in rough diamond import, which would be borne by individual importer. Since we have decided to follow production discipline, which means import of rough would depend upon jewellery demand. The decline in jewellery demand would proportionately impact import of rough diamond into India,” said Vipul Shah, chairman of Gems and Jewellery Export Promotion Council (GJEPC), under the ministry of commerce.
GJEPC along with diamond industry associations and exporters reviewed the market situation and “unanimously decided to defer the option of voluntary closure or embargo on rough import”, for the time being. “The meeting also saw industry leaders encouraging traders to instead opt for self discipline in import and purchase of rough diamonds based on their inventory and demand for polished diamonds,” said a official release.
“It has been decided not to stop imports completely, but leave it to individual companies. Each unit would follow a strict production discipline and as such imports would come down automatically," he said, adding the diamond polishing units have already cut down on production by about 30 per cent in the past few months,” Shah claimed.
The demand for diamonds is down globally, say diamantaires in Surat, and claim that there is liquidity crunch in the market. "At least 50 units in Surat have shut down temporarily, and about 300-400 units have cut production partially. The situation is grim with retail demand down by at least 40 per cent in the last few months," claimed Kirti Shah, a Surat-based diamond merchant. He further noted that most units in Surat are keeping their units closed for two-three days a week and have cut down on daily work hours.
It is estimated that Surat, which accounts for nearly 80-90 per cent India's diamond polishing, imports nearly Rs 2 lakh crore worth rough diamonds in a year. The major exporters in Surat are mulling to stop imports for a month or two.
Shah said the industry representatives have already had a meeting with commerce ministry officials and are in regular touch with the Centre on the issue. "We are asking the government to give interest subvention to the industry to help the traders tide over the crisis. There is already huge inventory in the market," Shah said.
A committee of leading diamond traders would be formed who would review the situation and suggest future course of action.
Besides, the diamond industry is reeling under frequent defaults of payments. In the last one month, defaults worth about Rs 700 crore have been reported in Surat, and the industry pegs the cumulative defaults value in a year-and-a-half to be around Rs 2,000 crore.
