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India
By Zainab Morbiwala
Good news for the Indian diamond industry seems a distant dream, with the market for polished showing no signs of improvement. Not only are exports down for the Indian gems and jewelry industry, but domestic demand for diamond jewelry is also declining.
According to Sabyasachi Ray, executive director, Gem and Jewellery Export Promotion Council (GJEPC), the diamond industry is facing a global crisis, not exclusive to India. He explained, “If I have to analyze, from April through July 2015, the market has seen a downfall of at least 25 percent as far as imports of rough diamonds is concerned, which means that almost one-fourth of the manufacturing is down. This is a huge downfall for the industry. As long as China does not show signs of improvement, it is difficult to estimate when we would see the diamond industry picking up. Where the U.S. is showing a healthy improvement, Europe is totally down. The Middle East is stable, but then again, if the Chinese demand does not pick up, the industry will suffer.” According to Ray, the Chinese economy will improve in another 18 months, with demand from India hopefully picking up by then. Ray was quick to point out that the fact that demand for diamonds was low during the India International Jewellery Show (IIJS) had nothing to do with the gold prices coming down. (See Diamonds Struggle at IIJS in Industry section.) According to him, 90 percent of the diamonds manufactured in India are exported, so that the variation in gold price cannot account for any increase or decrease in demand for diamonds as such. Highlighting the trend of jewelry buying in India, Ray pointed out, “In India, when a person goes to buy gold jewelry, he also indulges in spending a small amount on diamond jewelry. So if gold jewelry buying goes up, it should also result in an increase in the buying of diamond jewelry. Therefore, it is wrong to say that with the prices of gold going down, the diamond jewelry market will further suffer.” Vipul Shah of GJEPC reiterated Ray’s comments by attributing the fact that exports were down to the global economy and shared that until international demand picks up, the demand for diamonds will not improve. “Stars and small diamonds are not picking up and large diamond demand also is based on the price the stones are selling at,” he added.
To stabilize and streamline profitability, GJEPC is holding strategic meetings with the government and putting forth suggestions on how best the industry can benefit from various government interventions. With this in mind, the council recently held a meeting with Jayant Sinha, minister of state for finance, submitting suggestions for the next union budget regarding refining tax structures and other initiatives that would improve profitablility. Ray added, “The profitability has gone down and so wherever we can streamline and readjust things, we are doing so. The structural changes can at least help improve profitability in the short term. For long-term gains, we have to wait for the global economy to go up.”
The recent announcement by the International Organization for Standardization (ISO) specifying terminology to describe natural and synthetic diamonds has met with a warm welcome from the industry. A recent press statement released by GJEPC, along with the Bharat Diamond Bourse (BDB) and All India Gems and Jewellery Trade Federation (GJF), praised the release of ISO International Standard 18323 that provides a series of definitions to give further clarity for traders and to maintain consumer confidence in the diamond industry as a whole. The ISO ruling defines a diamond as something that was “created by nature.” It also says that “the denomination ‘diamond’ without further specification always implies ‘natural diamond.’” The ISO statement bars the usage of deceptive terms such as “cultured” and “cultivated,” as well as “real,” “genuine,” “precious” and “gem” to describe any synthetic diamond. It also states that brand names and manufacturers’ names combined with the word “diamond” are insufficient means of disclosure when applied to synthetic diamonds. This will help clear the existing ambiguity in identifying real diamonds. Anoop Mehta, president, BDB, stressed the fact that this move would help drive consumer confidence since consumers would know whether the diamonds sold to them are natural or synthetic. He stated, “ISO notes very clearly the issues that all Indian trade associations have been emphasizing for some time. Buyers do not usually have the technical knowledge to understand the many aspects of diamonds and so they are reliant on correct and honest labeling.” Adding to this, Shah shared that the importance of this standard is in the fact that it sets out which classification can be used and which cannot in the purchase and sale of diamonds, treated diamonds and synthetic diamonds.Article from the Rapaport Magazine - September 2015. To subscribe click here.
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