With the opening of the world’s largest diamond bourse in Mumbai, the two-day international conference entitled Mines to Market, a leadership change in the Gem and Jewellery Export Promotion Council (GJEPC) and the Hindu festival of Dusshera, the month of October proved to be extremely eventful for the gems and jewelry sector in India.
While there is good news from jewelry retailers across India, confirming the rise in domestic sales of gold and diamond jewelry, there is also reason for worry for diamond cutting and polishing companies because of the potential threat from China.
Mines to Market Highlights
The two-day international diamond conference organized in Mumbai by GJEPC generated interest from industry experts across the globe. In addition to reports on the current market dynamics of the gems and jewelry industry, the conference featured discussions of how India needs to take precautionary measures to avoid losing market share and position to China.
Chaim Even-Zohar, chairman of Tacy Diamond Consultants, said the Chinese government is actively and heavily investing in Africa’s mining sector, which includes diamond mines. He pointed out that in 2008, China imported $26 million worth of diamonds and exported $23 million worth.
Gareth Penny, former De Beers chief executive officer (CEO), shared a futuristic view when he said, “In 2009, India and China held 7 percent and 6 percent, respectively, of the global diamond market and by 2016, the numbers are expected to rise to 10 percent and 11 percent, which would be considered a neck-and-neck situation.”
A rather disturbing discussion at the conference — but one that generated much interest — addressed assertions that the Indian diamond industry suffers from a lack of credibility because the biggest players in the industry allegedly are involved in activities that are not considered “ethical.” Elaborating on these allegations, Rohan Shah, managing partner, Economic Laws Practice, a Mumbai-based law firm specializing in international trade law, said, “There is a lack of believability in our numbers. There is an inherent sense that in this industry, people are doing things that might not be quite right.” He noted that the allegation is that Indian companies “are not disclosing turnovers.”
Attendees at the conference also expressed concern over a preponderance of “round tripping,” the practice of manipulating a balance sheet by selling a commodity with the understanding that it will be bought back at the same price at a later date.
Bharat Diamond Bourse
After two decades of planning, design and construction and close to $250 million in expenditures, the industry finally witnessed the opening of India’s Bharat Diamond Bourse, which is being marketed as the world’s biggest diamond bourse. Set to replace the Opera House of Mumbai, the new bourse has 2,500 offices, four walk-in-vaults, 24,500 safe deposit boxes and a spacious 6,200 square feet of trading floor. The entire structure is built on 20 acres of land, considerably larger than other diamond trading bourse locations.
Noting that the bourse will help the industry generate international visitors and more foreign exchange, Anoop Mehta, president of the bourse, said, “We have not had international visitors to our industry before now because we just did not have the infrastructure, compared to destinations like Antwerp. But with this bourse, we are confident that international companies will not shy away from opening their offices in Mumbai.” In addition to the traders from Opera House and Mumbai’s Lamington Road, the bourse also will house the customs department, facilitating quicker and more efficient business. The bourse is expected to see from 20,000 to 25,000 visitors on any given working day, according to Mehta, who said the number could increase to 30,000 during peak hours. For security, more than 2,000 closed-circuit television cameras have been installed.
Change at the Top of GJEPC
After a productive two-year tenure as the chairman of the apex gems and jewelry body of India, Vasant Mehta recently turned over the reins of GJEPC to Rajiv Jain. Although based in Jaipur, Jain said he has no concerns about being away from the financial hub of the country. “In this world of technological wonders,” he said, “I do not foresee any problem with me not having my base as Mumbai, especially since I will be traveling to Mumbai at least once a week.” As for his plans for the organization, Jain said, “There shall be more effort on our part to collectively procure raw materials and encourage the same among the industry members. Personally, I also want to have more emphasis on trading colored gemstones. As for promoting jewelry from India, we will be looking at upgrading all the institutes in the country in terms of design and quality.” Looking to the holiday season, Jain said he expects more demand for low-quality and low-cost goods in 2010.
The Marketplace
• Demand was below expectations prior to the beginning of the Indian festival season.
• The volatile exchange rate has negatively affected activity in the local polished market.
• There were growing price differences between buyers and sellers during October.
• Demand for piqué goods has seen some downward trends recently, whereas demand for SI has improved.
• Demand for stars is improving.
Article from the Rapaport Magazine - November 2010. To subscribe click here.