By and large, most of the major requests submitted by gem and jewelry industry leaders were not included in government budget proposals drafted for 2010-2011. Commenting on behalf of the Gem & Jewellery Export Promotion Council (GJEPC), Chairman Vasant Mehta remarked, “With the unprecedented recession faced by the industry in the recent past, the industry needs constant support and aid from the ministry. This industry, which is in a recovery mode, posted $25 billion of exports in 2008-2009.”
One way in which the proposed budget could have helped the industry — and didn’t — Mehta noted, was by lowering the tax rate on profits, “which has been our demand for awhile now. It would have helped India truly establish itself as an international hub for diamonds, gems and jewelry.”
In addition, Mehta said, the government’s rejection of a requested extension of a 2 percent interest subsidy to the industry “will hurt the sector, as the cost of manufacturing will increase compared to competing countries, thus affecting our exports. Further, the local consumption of gold and silver jewelry may go down, owing to the increase in excise duty and this, in turn, may affect the number of skilled workers employed in this sector.”
On a positive note, Mehta said he was pleased with the commitment of the finance minister to develop skilled manpower in the country, especially in appropriating funds to the new Indian Institute of Gems & Jewellery (IIGJ), to be located in Jaipur.
Market Dynamics
According to Dhirubhai K. Dholakia from Bhavani Gems, diamond demand from Hong Kong is taking an interesting turn. “There is a strong demand for bigger-sized diamonds from Hong Kong, but we are still waiting for the American market to pick up pace. As far as demand in India is concerned, we see good movement in small-size goods.” Harsh Arora from Shairu Gems said he felt that “The demand from America has already taken a positive turn. At the September show and, most recently, the March show in Hong Kong, all the goods in the VVS category performed extremely well. Further, we were pleased to see the response from American buyers. I am sure that the Basel show too will get a very positive response.”
Anil Shah from Venus, who seemed happy with the Hong Kong show, was not as optimistic about BaselWorld, held March 18 to 25. Shah explained: “We realized the market requirements at the Hong Kong show, so it was a good experience for us. One-carat and 3-carat goods were moving fast. Although the consumer footfalls were reasonably consistent, the movement of goods was slow initially, but that changed eventually and demand picked up. The European markets are still warming up, so we are not expecting the Basel show to have quite as good a response as Hong Kong.”
The city of Surat is leaving no stone unturned in its efforts to develop its identity as a major diamond business hub. First, there was the dedication in early March of Gujarat’s first International Exhibition and Convention Centre. Later in March, the city was scheduled to dedicate a $2.6 million, state-of-the-art jewelry training facility, to be known as City Centre Indian Diamond Institute (IDI). Commenting on the opening, K K Sharma, executive director of IDI, remarked, “The main focus of this world-class center is to create the necessary skilled workforce for the rapidly progressing jewelry trade.” The institute has set a target to train more than 4,000 jewelry artisans in the next three years.
ALROSA Delegation
The delegation from Russia that visited India recently has signed historic deals with three local Indian manufacturers, in which ALROSA agreed to supply $490 million of rough diamonds over the next three years. Signing the contracts on behalf of ALROSA was its president, Fyodor Andreev. The agreements — with Diamond India Ltd. (DIL), Ratilal Becharlal & Sons (Jasani Group) and Rosy Blue — will help ALROSA boost its sales to India this year to as much as $1 billion, or one-third of the company’s planned output.
Praveen Shankar Pandya, chairman, DIL, who signed the contract on behalf of his company, said that “The diamond industry has long been trying to get direct supplies from ALROSA and DIL had been working continuously for the past three years to achieve this. DIL is committed to working closely with ALROSA in enhancing the value addition of diamonds.” DIL, a company formed by 60 diamond exporters, will distribute its purchases among its 60 committed members on a regular basis, and among other Indian manufacturers based on their requirements.
The Marketplace
• The Hong Kong show proved satisfactory, with good activity overall.
• Demand is very good for melee in lower piqué and in J+, SI+.
• Demand is good for 1⁄4, 1⁄3 and 3⁄4 in lower piqué.
• Activity is strong across the board in 1-caraters.
• Demand is good for certified goods in pear and marquise above 1 to 2 carats in I+, S+ and in princess cuts in 1 to 3 carats in I+, VS+.
• Some demand exists for princess, oval, pear and marquise in lower piqué and VS+ below 1 carat.
• The weakening of the dollar against the rupee continues, with a current ratio of 45 to 50 rupees per dollar.
Article from the Rapaport Magazine - April 2010. To subscribe click here.