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India
By Zainab Morbiwala
Industry leaders in India have taken different views on the current state of the diamond industry, with some seeing a harbinger of the 2008 economic crisis, while others are quick to dispel such fears. Speaking exclusively to Rapaport Magazine, Dinesh Navadia, president, Surat Diamond Association (SDA), noted, “The industry is facing tough times, but then it is wrong to say that we should expect a downfall akin to that of 2008.” However, Vipul Shah from the Gem and Jewellery Export Promotion Council (GJEPC) expressed his opinion that the situation India faces right now is no better than 2008 and there are chances that it could be even worse.
Navadia’s comments were made in the context of a media blitz as the month of July was abuzz with news of suicides in Surat by individuals related to the diamond industry. Navadia said, “The situation is not that bad. All that everyone needs to do is keep away from rumors and hearsay. The cases of suicides reported by the media cannot be considered as a parameter to arrive at a conclusion that the Indian diamond industry is at its worst. It is sheer coincidence that the people who committed suicide were related to the diamond industry.” Navadia insisted that the industry needs to stand up to the turbulent times instead of indulging in negative news that may not be true. Still, Shah, also speaking with Rapaport Magazine, minced no words. “In 2008, at least there was demand that made way for replacements of highly priced goods. Here, there is no replacement available and we see no demand being generated at all. Europe is not showing any signs of improvement at the moment. China, too, is going slow with the government going strong on the black money issue. In India, the domestic market is also not picking up, with consumers being extremely conservative on spending on jewelry and high-end goods.” According to Shah, the only way the market can come out of its shell is by planning collaborative marketing initiatives to create demand. Reiterating Navadia’s sentiment, an industry member speaking on condition of anonymity stated that the industry was lacking in confidence at the moment. Sharing his views on the recently concluded Hong Kong show, he said, “The Hong Kong show was not great. We did not see much action happening there, but then we also have to keep in mind that Hong Kong is hosting four shows in a year and we cannot expect each one to be a huge success.” The industry is looking forward to the India International Jewellery Show (IIJS) slated to take place in Mumbai between August 6 and 10.
The recently released export figures by the GJEPC accentuate the case for a negative scenario. Exports of gems and jewelry from India during June 2015 were down by 1.7 percent as compared to June 2014. GJEPC reported that the total exports of gems and jewelry during the month stood at $2,912.9 million compared to $2,962.4 million year on year. The slowdown was also seen in exports of gold jewelry, which totaled $601.5 million compared with $792.5 million in 2014, a year-on-year drop of 24.1 percent. Despite the slowdown, one category that did show growth was colored gemstones, which saw a jump in June 2015, with total exports registering $56.2 million compared to $41.2 million, a gain of 36.4 percent.
The month of July 2015 also saw a four-year low with gold reaching approximately $396 for 10 grams. According to Shah, this is good for luring consumers to come out and invest in jewelry, something that they were not doing comfortably in the past few months. In a development that can be seen as a move to support transparent buying and selling of gold, the National Commodity and Derivatives Exchange Limited (NCDEX) has launched a “new national market for gold” in Hyderabad. This is its fourth center in India, the other three being located at Ahmedabad, Chennai and Delhi, the national capital. As stated in its press release, the Gold Now platform is the first transparent and convenient online market for buying and selling gold in India. The release further explained that the platform will accept recycled gold in exchange-approved refineries such as Good Delivery with the goal of reducing dependence on imports, as well as aligning with the “Make in India” campaign promoted by Prime Minister Narendra Modi. Approximately 20,000 tons of gold is estimated to be in Indian households, temples and trusts, according to Suresh Devnani, head of business development at NCDEX. “If mobilized effectively, this could create a domestic supply of gold, while reducing dependence on imports,” he noted.Article from the Rapaport Magazine - August 2015. To subscribe click here.
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