Rapaport Magazine

Moving Forward

India March Market Report

By Zainab A. Morbiwala


India took a major step toward expanding trade with Pakistan during a recent visit to that country by a delegation from India’s Gem and Jewellery Export Promotion Council (GJEPC). They were accompanied by India’s Commerce and Industry Minister Anand Sharma on a trip organized by the Federation of Indian Chambers of Commerce and Industry (FICCI). The Indian representatives met with their Pakistani counterparts as part of the India Show held in Lahore, Pakistan, from February 11 to 13, 2012. A similar show is now being planned for Dubai.

Encouraging Trade

Despite their political differences in the past, India and Pakistan are working to establish trade relationships and agreements that would be mutually beneficial to both countries’ diamond industries. Rajiv Jain, chairman of GJEPC, explained, “The Indian gems and jewelry industry market is estimated to be worth $20 billion and the Pakistan market is estimated to be around $10 billion.” As a result of the trade expansion efforts, India is expecting to receive from Pakistan “most-favored-nation (MFN)” status in terms of trade and commerce. “We believe it is the right time to break all trade barriers and sign free trade agreements to further expand our bilateral trade,” said Jain.

Also encouraging foreign trade, four Indian diamantaries from leading diamond companies have been appointed honorary consul generals in four countries. They are: Rosy Blue’s Harshad Mehta for Armenia, Shrenuj’s Vishal Doshi for Botswana, Shrenuj’s Shreyas Doshi for Finland and Karp Impex’s Kishore Virani for Lesotho. The honors are considered important because the Indian diamond industry is hoping to tap the rough diamond resources from those four mining countries.

“We are the first industry in the country to get four consul generals representing India,” said Sanjay Kothari, GJEPC vice president. “These appointments will help us in rough diamond sourcing and skill development in diamond cutting and jewelry making.”

Gemstone and Rough Markets

The colored gemstone industry in India, frustrated with long delays launching the Coloured Stone India Pvt. Ltd. Association, has been told progress is being made. Kothari assured the industry that “the association for colored gemstones is in the offing and by March 2012 we should see some positive movement forward in its formation.”

A trade initiative for India’s diamond industry was completed in 2011 with the formation of Surat Diamond Sourcing (India) Ltd. (SRDSIL). The organization’s first online sale held in January 2012 had a good response, according to a report by The Times of India, an English-language daily newspaper. But response to the second online rough auction in February was described by The Times as “lukewarm,” which some industry members attributed to the recent flow of low-price, low-quality Zimbabwe diamonds into the local markets in Mumbai and Surat. In its second online auction, SRDSIL sold 21 of 31 lots for a total of $3 million, with approximately 51 percent of the goods sold to small- and medium-size diamantaires and rough dealers. Sales of $17.2 million had been reported at its first auction a month earlier.

Emphasis on Skills

In a move to boost the development of skills needed by the gems and jewelry industry now and into the future, GJEPC announced the formation of the Gem and Jewellery Skill Council of India (GJSCI). This new organization will be a joint venture of GJEPC, the Gem and Jewellery Federation (GJF), Seepz Gems and Jewellery Manufacturers’ Association (SGJMA) and the Jewellery Association of Jaipur (JJA). It will be promoted by the National Skill Development Centre (NSDC), whose goal is to create 500 million skilled workers in India across all industry sectors by 2022 through helping fund and providing direction to private training institutes.

GJSCI aims to train 4.07 million people specifically for the gems and jewelry industry in India by 2022.The governing council of GJSCI will consist of 11 directors from industry and two from the government. Of the 11 industry directors, five will be nominated by GJEPC, four by GJF and one each by SGJMA and JJA.

Another initiative to help solve the shortages of skilled manpower is being spearheaded by the Surat Diamond Association (SDA) through a program that is training tribal women in remote locations to cut and polish gems. The association is working on the program in conjunction with the District Rural Development Agency (DRDA).

Market Concerns

Commenting on market conditions, Kothari said that there has been a positive demand from the U.S. in recent months and overseas sales are increasing month by month. He said the domestic market is showing a very healthy demand as well.

Generally, however, there is concern that rough prices may increase, with the announcement by Philippe Mellier, chief executive officer (CEO) of De Beers, that the company has no plans to increase rough production, which could lead to shortages if demand increases.

 

The Marketplace

  • Overall trading activity remains slow because the market is cautious.
  • The ample supply of rough goods in the market is expected to soften prices.
  • Buyers’ resistance is keeping polished prices in check.
  • Market is hoping for stability in the dollar-rupee exchange rate.
  • Traders are likely to be more selective in buying because of the new 2 percent import duty on polished diamonds.

Article from the Rapaport Magazine - March 2012. To subscribe click here.

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