Diamond jewellery is an inherent part of cultures the world over. Not merely monetary investments but they are also considered emotional investments. India currently cuts and polishes 3 out of 4 diamonds. 92 per cent of diamonds are exported from India. But if one scans through the official export growth figures of polished diamonds one will find a consistent drop in statistics. During October, cut and polished diamond exports declined by 15.39 per cent year-on-year totalling US$ 1.95 billion during the month (October 2018: US$ 2.30 bn).
Rough imports during the month fell by 19.61 per cent to US$ 795.92 million as compared to US$ 990.09 million imported during the previous October. In volume terms, rough imports moved up marginally by 2.48 per cent from 9.66 mn carats during October 2018 to 9.90 mn carats in October 2019.
Imports of cut and polished diamonds rose to US$ 165.13 mn in October 2019 from US$ 92.11 mn in the same month a year earlier.
Exports of rough diamonds totalled
US$ 98.48 million in October 2019
as compared to US$ 133.02 mn a year
earlier.
A once booming industry complete with cutting and polishing of diamonds,
today presents a very different picture.
A series of modifications have altered
the industry as we know it.
Professional corporate structures have helped streamline the previously unorganized family owned businesses. The digital revolution has not spared the diamond industry either. Goods can now be listed online and can be accessed from any location in the world at any time. Round the clock assistance from marketing executives ensures instant sales and complete support should there be any glitches. A dedicated diamond bourse in the heart of Mumbai along with the emergence of Surat as one of the largest diamond cutting and polishing hubs in the world - it looked like great success was in store for the prosperous Indian diamond industry.
Another golden opportunity that fell into the lap of the industry was the declaration of US China Trade war in 2018. As the two largest economies in the world battle against each other for tariffs, India was poised to take advantage of the situation by making significant windfall gains. The diamond sector however, has a huge export deficit of polished diamonds of over Rs 20000 from the month of April to November 2019. The US-China trade war has benefited the gem and jewellery exports in Thailand in the past seven months even as India, which cuts and polishes 14 out of 15 diamonds consumed globally, has not been able to enhance its share of overseas shipments.
2019 saw the unruly antigovernment protests in Hong Kong that gradually gained heat and led to massive disruption of the city as well as its economy. This led to mass panic amongst the gems and jewellery industry as the Asian financial centre receives about 40 per cent of India’s cut and polished diamonds. A significant portion of this is absorbed by buyers in Mainland China. The situation escalated to a point where insiders feared that the shows held in June and September might be cancelled due to the violent nature of the protests. As it turned out, the shows did take place, however, Indian exports fell by 17.42 per cent in the first seven months of FY20.
Raising the Bar
“The Hong Kong protests have
definitely put a dampener in the growth
of Indian exports. In spite of US China
tensions, US will continue to favour
Chinese manufacturing techniques
as they have superior facilities when
compared to India. They have better
techniques and higher volumes for
gems and jewellery that India cannot
match. Countries like Vietnam and
Thailand have managed to increase
their own exports during the trade war
but there is a big gap in the market size
when compared to China. Vietnam and
Thailand may have benefitted from the war, but to a limited extent. There are
some export focused shows organized
in India but they are on a much smaller
scale as compared to overseas shows
like the ones that take place in Hong
Kong and China,” comments Apurva
Shah of M. Suresh.
to the figures published by GJEPC, there has been a decline of 26 per cent in exports of polished diamonds in the month of November as compared to November 2018.
“I don’t believe that Indian exports are not performing well. It is the global demand which is shrinking and consumer interest in diamonds and diamond studded jewellery that is dwindling or not growing enough. Efforts need to be taken to increase overall diamond demand that will help increase export numbers year on year. India is already the largest
“Currently, India’s diamond industry is suffering from a poor reputation. Some suppliers and manufacturers are doing well and are trying to create favourable impressions in the minds of consumers but some of them are trying to give the industry a bad name. It’s a classic case of a few apples gone bad, spoiling the reputation of the entire industry. India has tremendous potential for gems and jewellery, but the reputation needs work. Cases like Nirav Modi make us look bad as a country. Even quality control of jewellery needs to be worked on. For example, Italian products are renowned for their exceptional craftsmanship and attention to detail Currently, India’s diamond industry is suffering from a poor reputation. It’s a classic case of a few apples gone bad, spoiling the reputation of the entire industry. India has tremendous potential for gems and jewellery, but the reputation needs work. Cases like Nirav Modi make us look bad as a country. Even quality control of jewellery needs to be worked upon Vipul Sutariya, Dharmanandan Diamonds which makes it one of the most loved jewellery hubs in the world. So India too needs exceptional quality products that will boost the confidence of the consumer. Traditional techniques like jadau and meenakari have been a part of India’s identity since centuries and if highlighted correctly it could really put us on the map with respect to craftsmanship,” shares Vipul Sutariya of Dharmanandan Diamonds.
Ease of doing Business
One of the main reasons why it is possible
that India might not remain a hub of
polished diamonds is the import duty
on polished diamonds. Diamonds from
Southern African countries like South
Africa, Namibia, Botswana along with
Russia which would have ideally come
to India have actually gone to countries
like Hong Kong and Dubai in order to
avoid the 7.5 per cent import duty that
India levies. “If the country rethinks its
decision to decrease the import duty, it
could greatly help the export numbers.
Southern African countries want to
highlight their own manufacturing units
and are looking to get rough diamonds
cut and polished in their local factories
which will lead to loss of business for
India,” adds Ankit Shah.
For jewellery, it has been one blow after another. Policy changes like Goods and Services Tax (GST) have really hampered the ease of doing business for Indian exporters. “A lot of changes have occurred in the industry because of the GST regime. I know a lot of exporters who have shifted to Dubai or Hong Kong due to their export friendly policies. So those sales figures are added to the economy of countries affecting Indian exports,” says Dhawal Jain of Unialmaz.
Instead of making the system smoother, it’s getting more complicated. “When we take goods for exhibitions, we get notices for GST that is payable. This creates an unnecessary hassle. The compliances are made difficult to follow and there seems to be no solution in sight. There are also no export benefits to traders as of now. The outflow of money at the traders end is a lot more than the benefit they receive. Apart from this, prices of gold have reached an all time high and we have witnessed a sudden spurt of 20 per cent in a very short period of time. At these prices it is very difficult to create pieces,” says Ashish Kotawala of GDK Jewels.
Another important factor that has hampered Indian exports is that it is not able to catch up with the level of manufacturing and craftsmanship that countries like Thailand and Vietnam are offering. High-end brands prefer to give orders to those countries as they offer a superior product. While India is doing a good job as well when it comes to innovation, it still has a long way to go in terms of facilities and manufacturing techniques.
“Countries like Singapore are also emerging as manufacturing hubs with their advanced technology and competitive pricing. They provide good quality and quantities of goods as well. The fact that their policies are export friendly does not bode well for India. Gold prices are any way high in India because of import duty and taxes and the price of diamonds and coloured stones are similar across countries,” adds Jain.
According to the ITC (International Trade Centre), the country has huge potential to increase its export figures to $75 billion to 10 per cent of the world’s exports from its current standing of 6 per cent provided Indian traders explore new ways to realize untapped export potential. But how exactly can this be done?
Kotawala suggests, “Shows like IIJS Signature are not placed at the right time. It is just before the Hong Kong show and that is a much larger show than IIJS as it brings in a lot of foreign customers. So, buyers tend to prefer that over the IIJS. Ideally the best time for a show is the month of October as international buyers are very active at that time. This is also one of the reasons why the September show is very active. An export oriented show is a very good option for India to increase its export numbers.”
Better policies and more support from the government coupled with cutting edge manufacturing facilities along with an aggressive strategy to market diamonds might revive the slump in the diamond industry. India needs to conduct a thorough cleanup of its image and up its capabilities when it comes to high-end jewellery manufacturing
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