Now or Never: Changes the Diamond Industry MUST Implement-The Way Forward for the Diamond Industry

Don’t over buy – don’t oversell – acute business sense is the only thing that will keep diamantaires happy. Each company has to devise its own plan, based on its demand and supply equation Nilesh Chhabria, Finestar Jewellery and DiamondsDemand for diamond jewellery is slowly looking up, post lockdown, as manufacturing units and stores are getting back into action. GJEPC is working hard to withhold diamond prices, and bring in regularity in the working of this great industry. Organising webinars, to streamline SOPs, diamond supply chain, while negotiating policy matters with the government alongside.

All of this is setting the mood for a revived demand and a New Normal for diamond industry to discover and use to their advantage. There are no two ways about the fact that this industry needs a major overhaul. This pandemic is the right time to implement these big changes. From policy wise changes to what sightholders are expecting from miners, to what retailers are expecting from the entire industry on marketing front, here are some big changes we need to implement now.

The Sightholder’s Perspective

Scope for better assortment
From a sightholder’s perspective reduction of prices is not a healthy way of trying to increase demand – because that will not work. De Beers and ALROSA should not bring down their prices too much, because the cascading effect would be difficult to control. “If they really want to support the diamond industry, they should make the assortment a little better and make it available to us at the right time ensuring a smooth hassle-free supply,” says Nilesh Chhabria, of Finestar Jewellery and Diamonds.

On an average, diamond prices have fallen by 78 per cent. Mining companies should have given a better assortment so that market sentiment does not fall. Quantity of demand is determined by each and every sightholder – a miner will decide which company should be given better supply – this differs from company to company.

With regards to holding on to the prices and not reducing rough prices De Beers and ALROSA have done well. “Don’t oversell – acute business sense is the only thing that will keep diamantaires happy. Each company has to devise its own plan, based on its demand and supply equation ,” advises Chhabria.

In July, there was an increase in demand, however because of Covid19, manufacturing is suffering. “The way in which both the large miners De Beers and ALROSA allocate diamonds has evolved over time and has been dynamic. They have acted very responsibly ever since the pandemic began, they have been extremely flexible with their customers. In terms of dynamism, De Beers has also introduced the option of bespoke assortments for specific buyers,” adds Ankit Shah of Ankit Gems.

We had kept voluntary moratorium on import of roughs, which received good support from the whole diamond industry. Now, we are resolving problems arising on the SOP front. We are synergizing towards increasing demand and ensuring smooth supply of finished products Vipul Shah, Vice Chairman, GJEPCContinuing to import roughs with restraint
Stability of pricing was of utmost importance, which we have successfully achieved by taking traders, manufacturers, suppliers and all stakeholders into confidence. “We had kept voluntary moratorium on import of roughs, which received good support from the whole diamond industry. Now, we are resolving problems arising on the SOP front. We are synergizing towards increasing demand and ensuring smooth supply of finished products ,” explains Vipul Shah, Vice Chairman, GJEPC.

Markets in the USA and Europe are gradually opening up. “We are going to conduct number of virtual buyer-seller meets. Government has been helpful and given positive response. We had personal and virtual meetings with the finance minister. She has assured us that the 2 per cent levy will not apply to rough diamonds. We have to wait for proper procedure clearance for e-auction of diamonds. We have also asked for measures related to ease of doing business we are together trying to sort out issues related to customs, etc,” Shah informs. Exports are taking a longer time, because of shortage of customs staff, many diamond manufacturers are unable to meet export orders in time.

Maintain demand, supply equation As of now there are no concerns, because there is a good supply of rough diamonds. The situation has improved in terms of availability of rough and demand also has improved. Polished diamond prices too have been revised, so manufacturers’ interests have been protected. Market sentiment is improving and profitability will percolate to manufacturers as well. Some of the goods are in short supply, probably after a few weeks this situation will improve. “At present, 30, 40, 50 cents and some good quality carat diamonds are in short supply. The demand and supply equation has to be maintained by sightholders,” explains Vipul Sutariya of Dharmanandan Diamonds Pvt Ltd

jewellery comprises of everything – the polished diamonds cut to perfection, world class design, and finally the wellcrafted product, which is equally flawless. A piece of diamond jewellery is about the craftsmanship and exquisiteness of the design, rather than cost of individual components Dheeraj Menda, Studio Rêves“As far as the disparity between rough and polished prices, it is really in the hands of manufacturers. Just like how the miners are avoiding pushing more volumes into the market, manufacturers must also buy as much rough as they need instead of stockpiling,” says Ankit Shah.

Jewellery Manufacturer’s Perspective

Stop compartmentalizing the value of diamond jewellery
In jewellery one has to understand that a well-designed piece is a work of art. In India, people have to change their perception. “A piece of diamond jewellery comprises of everything – the polished diamonds cut to perfection, world class design, and finally the well-crafted product, which is equally flawless. A piece of diamond jewellery is about the craftsmanship and exquisiteness of the design, rather than cost of individual components,” explains Mumbai-based jewellery manufacturer Dheeraj Menda of Studio Rêves.

Each and everystage of diamond production matters; one cannot ask how much money went into procuring rough diamonds, how much cost was needed to get the diamonds polished and cut, and how much is the design cost – it cannot be compartmentalized – simply because a true connoisseur pays for the product, which s/he likes and which s/he will invariably buy. A good jewellery manufacturer will manage the costing and manufacture it on the scale that retailers want. It is the art that one pays for.

Matters of policy
Special Notified Zone (SNZ) was introduced in Mumbai under the Bharat Diamond Bourse in Mumbai in December 2015, the whole idea was to help the diamond manufacturers bring up diamonds on consignment basis and provide them to the small and medium diamantaires in industry – these are business persons, which aren’t able to travel to Dubai and other parts of the world regularly to buy diamonds.Another SNZ is being set up in Surat. There is a proposal for a turnover taxation for sale of diamonds in SNZ. The final call will be taken up by ministry of commerce (Central Board of Direct Taxation), because it involves taxation. “Both sides (Dept of Commerce and industry) will have to be open to idea of rethinking the idea of affordable turnover tax rate,” explained Rupa Dutta, former economic adviser at a recently held webinar. E-auctions are being conducted from Dubai and Antwerp, if turnover tax is reduced significantly or better still waived off, Indian diamond industry will benefit from these e-auctions.

The duty on polished diamonds should definitely be removed. We are supposed to be one of the largest exporters of cut and polished diamonds, but if the duty on polished diamonds continues to exist, we will lose being a polish diamonds market hub to Hong Kong or Dubai and it is already happening. The other beneficial thing would be introduction of turnover tax. It would be simpler if turnover tax comes into place – the GJEPC has been in talks with the government for this Ankit Shah, Ankit GemsAccording to Evgeny Agureev, Deputy CEO, ALROSA, “Our polishing business will get an impetus, as Indian market wants polished diamonds on a larger scale.” Reduced duty on polished diamonds will surely enable miners to supply more to the Indian markets, where even the mid level and small diamond businesses can benefit from direct sale of polished diamonds.

According to Sanjay Shah, Convener, Diamond Panel Committee, “When we think about perfumes – we think about Paris.When we think diamonds -- we can be thinking of India – from availability of polished diamonds to finished products, everything can be supplied by India to the world. ” When polished diamonds are brought into India at a much reduced import duty, India can easily become the world’s most important diamond distribution hub. Reduction in duty is the industry’s need. Polished diamonds are sold cheaper in Hong Kong and Dubai, than in India – because there they don’t have duties. “The duty on polished diamonds should definitely be removed. We are supposed to be one of the largest exporters of cut and polished diamonds, but if the duty on polished diamonds continue to exist, we will lose being a polish market hub to Hong Kong or Dubai and it is already happening. The other beneficial thing would be introduction of turnover tax. It would be simpler if turnover tax comes into place – the GJEPC has been in talks with the government for this, and the talks are going on,” adds Ankit Shah.

Many buyers who thought diamond is out of their reach, are putting in the extra cash to buy diamond jewellery instead of gold Vaibhav Saraf, Aisshpra Gems and JewelsThe Retail Game Plan Demand for diamond jewellery has improved post lockdown, primarily because there was a misconception among the masses that they could not afford it. Now, since gold prices have increased, the difference in price between gold and diamond jewellery has reduced considerably. This has improved aspirational purchase of diamond jewellery. “Many buyers who thought diamond is out of their reach, are putting in the extra cash to buy diamond jewellery instead of gold ,” says Vaibhav Saraf, of Aisshpra Gems and Jewels

Gold jewellery is popular in India primarily because of traditional value and good returns on investment. The buying and selling rate in case of diamond jewellery – isn’t uniform. Today, a client who buys diamond jewellery isn’t investing – for him or her it is a major expense. Standardised buy back policies need to be drawn up and adhered to strictly. In India, or even worldwide, sentimental value of diamonds is the only thing that makes people buy diamond jewellery. Diamonds are looked upon as a status symbol especially in tier II and tier III cities.

Diamonds must become synonymous with gifting
“Interestingly, post lockdown as compared to last year – sale isn’t that bad – it is surely less than 10 - 20 per cent as compared to last year’s sale of diamond jewellery. In fact, we even launched a new store in Ujjain. The demand for diamond jewellery is increasing – because of hike in gold prices,” informs MP-based retailer Anil Kataria, DP Jewellers.

Indian youth is smitten by diamonds. Nowadays, diamond rings are preferred by many. Often while gifting jewellery for the first time – people prefer diamond jewellery. Today, the price difference between gold and diamond has reduced and that is working in favour of increasing demand for diamond jewellery. In case of larger diamonds, people go in for Forevermark or Solitaire diamonds. In case of other jewellery they prefer certified diamonds set in exquisite designs. These are usually small diamonds with micro settings.

Play on the emotional quotient
“We reopened our store on June 5, post lockdown. About 20-30 per cent demand for diamond jewellery is back. In our case, especially in Mumbai we have a lot of demand for diamond jewellery. In fact, 80 per cent of our sale is of diamond jewellery and only 20 per cent of gold. We have been very focused on diamond jewellery. Our whole image is about diamond jewellery,” informs Ishu Datwani of Anmol Jewellers.

We reopened our store on June 5, post lockdown. About 20-30 per cent demand for diamond jewellery is back. In our case, especially in Mumbai we have a lot of demand for diamond jewellery. In fact, 80 per cent of our sale is of diamond jewellery and only 20 per cent is gold. We have been very focused on diamond jewellery. Our whole image is about diamond jewellery Ishu Datwani, Anmol JewellersIn order to encourage buyers to buy diamond jewellery, as compared to gold – focused efforts for marketing and advertising are necessary and also a study of the market will tell you if you have that kind of people around to come forward to buy diamond jewellery. In terms of product categories, rings are fast moving. By and large, jewellery set in small diamonds is more in demand, while a certain section always goes in for bigger diamonds. “Some want branded jewellery, while many come to us for our own brand,” Datwani explains. Emotion plays a great role in purchase of diamond jewellery. When buying for oneself also emotion is there – that ‘I am worthy of wearing a good pair of diamond earrings.’ It is the sentiment of self-worth which comes into play. Marketing efforts make all the difference. The real sale will happen when you have the right product