RAPAPORT... The thriving $12 billion diamond industry in India is moving out of its closed shell and looking at avenues for sourcing diamonds from various countries at competitive rates. The government’s move to negotiate the procurement of rough diamonds from the African countries where they are mined has been well accepted by the industry players. In the past six months, diamonds worth $15 million to $20 million have been procured, with a major share coming from Russia’s ALROSA.
India’s commerce ministry is in touch with Azerbaijan, Uzbekistan, Kazakhstan, Venezuela, Canada, Australia, the Democratic Republic of the Congo and Ghana for the direct purchase of diamonds. Anil Shah, director, Venus Jewels, applauded the government’s efforts to work out better negotiations with the African government as “a positive move.” Sanjay Kothari, chairman of the Gems and Jewellery Export Promotion Council (GJEPC), said that the “government’s move to procure diamonds directly from countries that mine them will result in cost benefits of 4 to 5 percent. Improved negotiations with Russia are a positive sign since intermediaries will be eliminated and the diamonds will be directly channeled to India. Russia also needs new customers and hence it is beneficial to both sides.”
No Shortage of Suggestions
To further support the diamond industry, Mehul Choksi, chairman, Gitanjali Group, suggested the government “must institute better incentives at the taxation level and also figure out a way to limit new entrants in an already-overcrowded marketplace.” Ashish V.Shah, managing director, Goldstar Group, suggested that the government also could “help us present our case for duty relaxation to the U.S. government.” Alkesh S. Shah, vice chairman, Goldstar Group, thought “The government here needs to have better PR with all the nations and show more proactiveness. They need to wake up before it is too late.”
Venus’ Shah had a long list of requests for the Indian government. He said that “Infrastructure developments like the provision of consistent power supply to manufacturing units at all the important centers need to be looked at and new international airport facilities are needed so clients can travel to the manufacturing centers.” In the financial area, he recommended the “creation of bank accounts at multiple international trading centers and the active encouragement of online diamond buying through credit cards,” noting that “right now customers have to purchase diamonds through wire transfers.”
JCK ShowAttendance by new customers seemed to be worrying participants at the JCK show. Alkesh Shah from Goldstar felt movement at the show was very slow. The same view was reiterated by Choksi, who said, “The attendance felt low. There was a lack of overall confidence in the marketplace for both the near term of the season as well as for long-term viability.” Manish Poddar, director of operations, Suahish Diamonds, said, “There was no new crowd. One participates [in shows] to tap into new buyers who unfortunately were missing this year.”
For Ashish Shah, “The JCK show went off very well. In terms of what was being sold/purchased, I feel the independents were going in for bridals and bands and the majors were there just for product evaluation and to ask for samples. Only the independents were buying.”
Supply and Trends
While Choksi feels that Journey will continue to be a hot item this season, Poddar says “People are not much into Journey. It has become a regular item. Stars might be promoted.” Choksi added that “Cushions are beginning to penetrate the marketplace in a meaningful way.” Alkesh Shah said that “Princess is dying; the rest all are doing well. In terms of color, yellow is most in demand.”
Sanjay Shah, director, R.T.Diamond, noted that “Rough is scarce due to the increase in the cost of supplies for mining companies.” According to Venus’ Shah, “The lack of a proper organized channel for rough diamonds results in unwanted markups for the rough goods, which results in increases in the price of polished.” Alkesh Shah blamed polished increases on “rupee devaluation, profit margins and the higher cost of raw material.”
The Marketplace• Activity is very strong for -2 goods of - 0.01 carats across the board, resulting in extreme shortages.
• Movement is slow for stars, with prices down by 1 to 2 percent.
• Activity is strong for melee goods above I2 clarity and prices are up by 2 to 3 percent.
• 0.08 to 0.18 carats are doing extremely well in I1-I2 and VS+ but SI goods are slow.
• 1/5, 1/4 and 1/3 are doing well in extreme qualities, either very high or very low piqué goods.
• 0.50 carats and halves are showing better movement and VS2+/I+ are doing well. Discounts are stable.
• 0.70 to 0.99 carats are doing extremely well for rounds and fancy cut diamonds across the board, especially for collection goods. There are shortages in 0.80 carats.
• Activity is strong in 1 carat+, especially for premium sizes. There are shortages for better qualities VS1+/H+.
• 2- to 2.99-carat collection goods have picked up movement after a very slow patch.
• 3.00 carats+ are in excellent demand, causing severe shortages. Bigger sizes are harder to find.
• Fancy cuts are doing very well in SI+/J+ in sizes across the board. It is difficult to find well-made matched pairs.
Article from the Rapaport Magazine - July 2007. To subscribe click here.