India

While 2017 failed to add any sparkle to India’s gem and jewelry industry, the trade is optimistic for the coming year.
   Mehul Choksi, chairman of the Gitanjali Group, called 2017 “a difficult year” in which retailers had bought fewer goods and eagerly worked to unload the stock they had.
  Sanjay Shah, a partner in manufacturer KBS Diamonds, pointed to demonetization as a key influence on the year’s market dynamics. “Almost all the industries and businesses across India got affected by the demonetization policy that took place in November 2016. Though these put together resulted in a short-term pain, we also need to realize that eventually these would pave way for long-term benefits as the old ways give way to a newer structure of transparency and social welfare.”
   As for the policy’s impact on the gem and jewelry industry, Shah cited De Beers estimates that India exports 93% of the diamonds it produces, so “we can say that the export business remained unaffected. But then the domestic consumption of gold, gems and jewelry did witness an adverse effect.”

Ups and downs
A further disruption of business came with the implementation of the Goods and Services Tax (GST) in July.
   “GST has been introduced by the government of India to streamline all businesses, making them transparent,” explained Shah, who also sits on the diamond panel at the Gem and Jewellery Export Promotion Council (GJEPC). “Within our industry, all jewelers who were GST-compliant continued to do the same business, while others started bracing themselves to formalize their businesses.”
   On the whole, he said, “2017 was an average year for the Indian jewelry industry, with a promise of a brighter 2018.”
   Internationally, the market ultimately showed little improvement over the year, Shah continued. “The year for Indian diamond and jewelry [exports] to the United States of America began on a good note, with a decent Christmas 2016 [and] Indian manufacturers receiving good orders. However, the momentum slowed down as the year progressed, as major specialty retailers reported weaker sales, while online businesses picked up. Overall, the gains that we witnessed in the first half of 2017 were nullified by a slow second half.”

Rough time at home
Domestically, however, the trend went in the opposite direction, according to Nirav Bhansali, director of manufacturer and supplier Prism Jewellery: “2017 began on a bad note. The first seven to eight months were least exciting for the industry, though in the last four to five months, we have witnessed some stability. During the first seven to eight months, we had issues of tight margins and even scarcity of rough,” as the supply was curtailed by De Beers’ rough sales division, he explained.
   Additionally, he said, some companies’ declarations of bankruptcy in September shook industry morale.
   Nonetheless, Bhansali continued, “the supply of rough has now been stable, and we see polished moving as well.” In the domestic market, there is strong demand for melee and full cuts, he elaborated, adding that for the last two years, “we are facing a problem with the demand for stars in India. Internationally, there is good demand for 3-carat [stones] and above, and also for dossiers.”
   Like Shah, Bhansali considered 2017 “an average year — not too bad, but not a good year, either.”

Article from the Rapaport Magazine - January 2018. To subscribe click here.