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India
By Zainab Morbiwala
The illusion of a bright 2015 appeared to hit a roadblock in the very first weeks of the year, when rumors flooded social media that synthetic diamonds were being mixed with natural diamonds. Both the Gem and Jewellery Export Promotion Council (GJEPC) and the Surat Diamond Association (SDA) reacted quickly and aggressively in issuing a joint statement threatening serious legal action against the culprits. Vipul Shah, chairman of GJEPC, shared his deep concern over the incident and minced no words when he said that this was a calculated move to tarnish the image of reputable diamond companies. Dinesh Navadia, president of SDA, announced that industry bodies would be asking the government to frame a special law that would apply to the illegal practice of mixing synthetic diamonds with natural diamonds. According to their joint statement, GJEPC and SDA are both urging the state and central governments to introduce separate Harmonised System (HS) codes and duty structures at every stage from import duty to value-added tax (VAT) for natural and lab-grown diamonds. The goal is to create differentiation at each level for the protection of customers and the Indian diamond industry. On another front, the issue of availability of credit from the banks continues to be a serious concern for the gems and jewelry players. The banks are increasingly wary of lending credit to this sector because of the ever-increasing cases of default on loans. This is hampering the import of raw materials. As unfortunate as it sounds, banks have classified the gems and jewelry sector as a high-risk category.
In opening the Kolkata Jewellery and Gem Fair 2015, the Calcutta Gems and Jewellery Association, in association with fair organizer UBM India, took the opportunity to promote the soon-to-be-completed gem and jewelry park, Ankurhati at Howrah in West Bengal. Dr. Amit Mitra, minister in charge of the Department of Finance, Commerce and Industry for the government of West Bengal, suggested that the industry players should look at establishing partnerships with Italian companies, who have a reputation for high-end jewelry design, and other design institutes to set up a facility at Ankurhati to take the park to the next level. The park already houses manufacturing units. Spread across seven acres, Ankurhati is expected to serve domestic and export-oriented businesses. More than 30 companies have already booked approximately 125,000 square feet of space in the first building. Leasing is ongoing for the second phase, which is scheduled to be operational by 2016.
An indication of the increasing importance of online retail in India is the recent appointment of Vikram Raizada at Amazon India to head the jewelry category. Having created a name for himself as the former executive director and chief executive officer (CEO) of retail for Tara Jewels, Raizada is expected to lead the category for both fine and fashion jewelry. Since its entry into jewelry etailing in India in December 2014, Amazon has been making waves with its assortment of products being offered online and its zero-questions-asked return policy. The jewelry brands that have signed up with the mega etailer include Orra, Tara Jewellers, Mehrasons Jewellers, Gitanjali Group and Rose Group. In a recent report, Indian research firm Research and Markets forecasted that the jewelry market in India will grow at a compound annual growth rate (CAGR) of 15.95 percent over the period between 2014 and 2019. The report cites the popularity of brands, an increase in per capita income and the perception of jewelry as a status symbol as among the factors driving the growth. According to the report, the key brands that will drive the change will be Gitanjali Gems, Kalyan Jewellers, Malabar Gold and Diamonds and Titan Company Ltd.
Data released by the GJEPC indicated that exports of cut and polished diamonds during the month of December 2014 declined by .03 percent and gold jewelry exports rose by .55 percent over December 2013. Gross exports of all gem and jewelry items didn’t perform very well either, posting a negligible 1.65 percent rise year on year. Exports of cut and polished diamonds from India during December 2014 totaled $1.4 million, a slight $45,000 decline in value. In volume terms, exports declined marginally by 60,000 carats from 2.04 million carats in December 2013. As for imports, rough diamonds dropped by 13.4 percent in value terms during December 2014 and in volume terms by 3.13 million carats.Article from the Rapaport Magazine - February 2015. To subscribe click here.
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