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Though the diamond-processing sector saw increased domestic sales during the Diwali season, it is cautious about prospects during Christmas. Many units are seeing increased costs of funds, expensive rough diamonds and an overall tight market.
Insiders say 30 per cent of the units, mostly small and medium, are facing tough times.
“Small players face the problem of finance and raw material. Those in the trading business are also facing problems due to fluctuation in currency rates. It is difficult for small players to survive,” said Dinesh Navadia, president, Surat Diamond Association. Surat processes 90 per cent of the diamonds in India.
Officials say major markets for polished diamonds such as the US and Japan have shown signs of a drop in imports from India. These account for 40-45 per cent of diamond exports. In September, polished diamond imports from India to Japan fell five per cent to $41 million.
To tackle the high prices of rough diamonds, traders have been selling polished diamonds at higher prices. However, big companies say prices have stabilised and it is likely exports to the US and Japan would rise during the Christmas season.
A survey by the Associated Chamber of Commerce and Industry (Assocham) showed this year, 76 per cent of the jewellers in India were focusing on marketing platinum and diamonds during festive seasons, than marketing traditional gold and silver jewellery. D S Rawat, secretary-general, said, “The demand for diamond jewellery has risen more than 25 per cent this year, with an equal rate for low- and high-end markets.”
“With signs of recovery in the US, we expect two-three per cent growth in exports to there and Japan. We have seen good business during Diwali in the domestic market. Also, at Antwerp (Belgium), rough diamond prices have stabilised. We see things turning,” said Agam Sanghavi, director, Sanghavi Exports, one of the largest diamond manufacturers and exporters in Surat. A month before Diwali, the Gems and Jewellery Export Promotion Council Chairman Vipul Shah had said most manufacturers had started reducing production compared to the last quarter. “Rising prices of rough diamonds, currency fluctuations and limited finance options, with banks having become stringent, have recently had a severe impact.
“There is a shortage of rough diamonds in the country,” said Pravin Nanavati, a diamond merchant and former president of Surat Diamond Association.
The diamond industry, which employs about 400,000 in Surat, is shut for Diwali festivities for 20 days. “The units will open only after November 20. Many units have reduced production for want of rough diamonds. Also, the financial burden has added to the worries for small players. We may see some units extending their vacation by a few days,” said a diamond industry official at the Varachha market in Surat.
FADING ROCK STAR
* Many processors are seeing high cost of funds, expensive rough diamonds and an overall tight market
* Markets for polished diamonds, such as the US and Japan, have shown signs of a drop in imports
* Traders selling polished diamonds at higher prices
* Shortage of rough diamonds in the country
