RAPAPORT... The provisions drafted for the gem and jewelry sector in the 2007 Union Budget are likely to bring the sparkle back to the market. The gem and jewelry industry is expected to benefit from a proposed cut in import duty on uncut diamonds, precious stones and unworked corals. The tax would decline to 3 percent from the present 5 percent on cut and polished diamonds, to 5 percent from the present 12.5 percent on rough synthetic stones and to 10 percent from the present 30 percent on raw coral.
Budget ReactionAnaggh Desai, chief executive officer (CEO), Damas India, didn’t sound overly impressed with the budget when he said, “The drop in taxes is primarily on rough and not on finished jewelry. The long-awaited relaxation in terms of foreign direct investment (FDI) has not even been addressed.”
Desai pointed out that for retailers the cost of doing business has increased in the proposed budget. “The service tax has been extended to the rental of immovable property for use in commerce or business. Consequently, retail organizations will now incur an additional tax of 12.3 percent on the lease rentals of retail space,” he said.
Fancy Shape Overview
Shape and color are two important properties in attracting customers. But when it comes to diamonds, this rule may not apply, as a white, round diamond still remains the favorite with the majority of diamond customers. Talking about the market for fancy shapes in India, Sanjay Shah, director of R T Diamond, said, “The market for fancy in India is good. It was slow initially, but at present the demand is very good and people are looking for something different in the shape.”
Ashish Goenka, managing director, Suashish Diamonds Ltd., agreed, adding that “The market here is gradually picking up, especially in the metropolitan cities with the affluent class, where the people are looking at more variety in their jewelry and want to go beyond the conventional round shapes.” Associating a legacy of fancy shapes with Indian customers, Desai commented, “Looking back, Indians have been wearing different shapes in diamonds for thousand of years. So it is nothing new to the Indian consumer, but yes, in terms of the cut, designs and overall appeal, there surely has been a leap in the usage.”
Demand for Fancy ShapesMehul Choksi from Gitanjali Group has a unique perspective; his company specializes in rounds, baguettes, princess cuts, marquises and 26 other fancy shape diamonds. “Rounds are always in demand and globally, European Union (EU) countries like Italy, Spain, France and the United Kingdom (U.K.), followed by the U.S., the Far East and the Middle East are the biggest consumers of fancy shapes,” he said. Goenka had a similar opinion, commenting that “Apart from the round brilliant, the most common shapes in demand are the marquise cut, princess cut, pear shapes and taper/baguettes.” Shah agreed with Choksi, noting that “Anything that resembles round is more in demand and we feel that the U.S. is still the major consumer for fancy shapes.”
Marketing and Sale of Fancy ShapesThough the diamond fraternity globally is close knit, each company devises niche methods to market its own products. In marketing Gitanjali’s fancy shapes, Choksi said, “We market our stone through effective communication material and informative brochures and pamphlets. We also market fancy shape brands and plan to launch some of them at the BaselWorld Fair 2007.” Sharing the strategy employed by Suashish Diamonds, Goenka said, “The marketing for the fancy is very similar to the round brilliants, although the demand for fancy shapes is more specific in the sizes used, and consistency in the shape of the pieces is very important.” In regard to fancy shapes, Desai explained, “The end product is, of course, jewelry, but that is looking at it from the consumer’s point of view. Jewelry manufacturers or retailers buy loose stones from brokers and/or sightholders and have them set in their jewelry. These days, a lot of retail outlets even sell loose certified diamonds in blister packaging like any other commodity in the market. Packets or larger sizes are sold loose and treated as investments, much like gold.”
The MarketplaceIndia is seeing average movement with shortages of goods in certain categories.
• Demand is very strong for -2 in the range of $200+. There is an extreme shortage of goods in this category.
• Stars are seeing average movement, mainly in the VVS-VS/I+ category.
• Activity is good for melee goods in the I2+/I+ category.
• Movement is good in 0.08 to 0.18 carats in the price range of $300 to $450 and VS+/I+.
• 1/5,1/4 and 1/3 are enjoying good movement in piqué goods.
• 0.50 carats have better movement in
I1-I2/I+ and VVS/H+ goods.
• 0.70 carats are in good demand for
I1-I2/I+ and VS+/I+ categories.
• 0.90 carats are in very strong demand, with extreme shortages in supply.
• 1.00 carat is in good demand for
collection and piqué goods. Shortages exist for premium sizes and extreme shortages for 1.70 carats+.
• 2 carats have average movement in collection goods.
• 3 and 4 carats are in good demand, with shortages in supply.
• 5 carats+ are in very strong demand, with extreme shortages.
• Demand is strong for princess, marquise and pear cuts in collection goods across the board.
Article from the Rapaport Magazine - April 2007. To subscribe click here.