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Demonetization Stifles India’s Diamond Imports
Jan 18, 2017 8:01 AM
By Rapaport News
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RAPAPORT... India’s diamond trade is still reeling from the government’s shock demonetization policy as local demand for rough and polished diamonds declined in December.
Rough imports, predominantly used in India’s vast manufacturing sector, fell 5 percent year-on-year to $1.4 billion during the month, according to data published by the Gem and Jewellery Export Promotion Council (GJEPC).
Demonetization was cited by mining companies De Beers and ALROSA as reason for a slowdown in demand for lower-value rough diamonds in November and December. Liquidity among smaller Indian manufacturers was squeezed after the government invalidated INR 500 and INR 1,000 currency notes in a controversial move to root out black money.
“Demonetization is likely to have an impact on several of our businesses so we need to respond in the right way,” De Beers CEO Bruce Cleaver told sightholders this week. “It’s likely we will continue to experience the impact in the Indian industry in the coming months.”
The slump in demand has been most felt by smaller diamond manufacturing units as independent jewelers placed fewer orders amid a sharp decline in consumer spending on gold and diamond jewelry. India’s polished imports dropped 14 percent to $205.4 million during the month.
Larger exporters were relatively unaffected, as data showed overseas shipments of polished rose 23 percent to $1.48 billion, leaving net polished exports – reflecting the excess of exports over imports – 32 percent higher at $1.28 million.
India’s December net diamond account improved 89 percent to a deficit of $45 million as total imports exceeded exports.
For the full year, polished exports rose 6 percent to $22.09 billion, according to Rapaport calculations. Rough imports grew 22 percent to $16.62 billion. India’s 2016 net diamond account declined 15 percent to $4.2 billion.
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Tags:
Alrosa, Bruce Cleaver, De Beers, Demonetisation, diamonds, India, Jewelry, Rapaport News
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