RAPAPORT...
While the diamond industry in India is reeling under the
pressure of rising prices for raw materials, the Gem and Jewellery Export
Promotion Council (GJEPC) hosted two events to boost spirits and market
confidence.
The first was the 38th annual awards ceremony on October 11
that recognized importers, exporters, brands, local diamond companies and banks
that support the industry. The second was the International Colored Gemstone
Mines to Market Conference at Jaipur, part of GJEPC’s ongoing efforts to
promote India as a processing and trading hub for colored gemstones. The
conference, scheduled for November 2 to 3, was modeled on a similar meeting for
diamonds that was held in 2010.
Surat to Lead the Way
The majority of the world’s diamonds are cut and polished in
Surat but the local industry was exhorted to expand its diamond interests even
further by Narendra Modi, chief minister of the Gujarat district where Surat is
located. Speaking at GJEPC’s awards ceremony, Modi, who was a guest of honor,
told the audience “It is time for the diamantaires of Surat to give serious
thought to owning diamond mines around the world to capitalize on diamond
resources for the industry. I know many Gujarat business tycoons who own coal
mines around the world.”
Modi invited GJEPC to partner with the Gujarat government in
its program to celebrate 2012 as Youth Empowerment Year, during which the local
government plans to expand the training of Surat’s diamond polishers into
jewelry designing and manufacturing, thus equipping them for better career
prospects. In another interesting suggestion, Modi said that since Surat is the
world capital of diamonds and Morbi, another city in Gujarat, is the world capital
of wall clocks, the diamantaires should collaborate with the Morbi clock
manufacturers in designing diamond-studded wristwatches.
Luxury’s Potential
A recently released review of the Indian luxury market,
conducted by A.T. Kearney, had only good news for international jewelry
companies planning to enter India, as well as domestic companies focused on the
high-end jewelry market. On the list of surveyed luxury products, jewelry was
one of the strongest performers. The luxury jewelry category, in fact, showed
growth of 30 percent from 2009 to 2010, even stronger than the earlier forecast
of 21 percent growth. The downside of the generally positive report was the
fact that the growth was not driven by increased demand and sales, but rather
by the increased gold and diamond prices and low price elasticity.
Exploring New Mines
Just as the industry is suffering from the scarcity of rough
and desperately searching for new sources of raw material, there comes some
good news from The Economic Times of India, the country’s leading daily
financial newspaper. According to the newspaper, Rio Tinto is close to
obtaining a license to mine a diamond field in Madhya Pradesh. This could make
the state one of the world’s top diamond producers. The Bunder project would be
Rio Tinto’s first operating mine in India and the only new diamond mining
project in the country in the past half century. Rio Tinto has been prospecting
for diamonds across India since the mid-1990s. Rajiv Jain, chairman of GJEPC,
welcomed the news. “On behalf of the council, I would like to offer any support
needed as this will help the industry as a whole and also help India by
providing a good supply of rough from within the country itself.”
GJEPC Revamps its Brand
In the midst of its trade initiatives, the council recently
adopted a new corporate logo of four colorful petals increasing in size to
represent the growth of the Indian industry and its expansion into colored
gemstones. Jain said, “We have been planning a new logo for almost 18 months
now. The old black and white logo was designed and conceptualized years ago.
Now we have moved into a world of color that reinforces the message that India
is not only about diamond polishing, but also is working on a leadership
position in the area of jewelry design and colored gemstones.”
If the gems and jewelry industry was expecting sparkle this
Diwali holiday season, it probably was disappointed. Holding back demand was
the rising price of gold, as well as a shortage of rough, which put more upward
price pressure on diamonds.
“We are not expecting a healthy buying season this Diwali in
India,” admitted Dharmesh Sutarya, partner, Bhajan Jewels, before the October
26 holiday. “It’s true that there have been no cancellations of orders from our
international clients so that gives us less reason to worry. Right now, demand
is for VS grade goods in diamonds between .90 carats and 1.49 carats in colors
from G to K. That is what is ruling the market right now.”
The Marketplace
- Overall demand remained very low, even before the Diwali
holiday.
- The market is looking for price stability.
- Polished and rough prices have gone down but by less than
expected.
- The industry is hoping demand will improve with the start
of the local wedding season following Diwali.
Article from the Rapaport Magazine - November 2011. To subscribe click here.