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India
By Zainab Morbiwala
October 2015 saw the official announcement of the election of a new chairman, Praveenshankar Pandya, and vice chairman, Russell Mehta, for the Gem and Jewellery Export Promotion Council (GJEPC) for the 2015-2017 period. They will replace Vipul Shah and Pankaj Parekh, who held these respective posts for over two years. Pandya had served as chair from 1996 to 2000. Upon taking office, Pandya spoke exclusively with Rapaport Magazine, highlighting the immediate tasks at hand. “I am seeing that due to economic recession and slowdown in the world market, the diamond and, by and large, the gems and jewelry industry, have been impacted. Most of the countries, barring the U.S., are facing a decline in the demand for diamond jewelry. The whole industry needs to work together — starting from miners to jewelry retailers. Everyone needs to understand this. The solution cannot be offered by one person or one party alone. Miners need to sit with the manufacturers and find out what needs to be done. According to me, it is not just the price correction. Unless the inventory that is jammed in the pipeline gets cleared, there will not be any real business coming forward.”
Pandya believes that for the next three to six months, the miners need to drastically impose self-discipline and reduce supply. If they opt for reducing prices, then the supply needs to be reduced by 50 percent. Elaborating on this, he added, “They supply excess quantity at reduced prices, and as a result, the diamantaries who do not have much demand will end up buying more. So it is in the interest of the industry that along with reduced prices, they also cut down on the supply. In a matter of three months, we would start to see results. Manufacturers, too, need to maintain their production and produce only what can be sold. All these actions will then increase the confidence of jewelry retailers, who will see a balance in the market between what is supplied and the demand from the market.”
For the first time ever, the import of rough diamonds, the only raw material required for diamond manufacturing, has shown a huge decline of approximately 26 percent from April to September 2015, in comparison to the same period in 2014, according to a GJEPC release. Due to lower imports, the previous total of 1 billion stones cut and polished by the Indian diamond industry has also been reduced by a corresponding 26 percent. This in turn has impacted the livelihood of an estimated 250,000 families of the 1 million workforce employed directly by the sector and may even create further unemployment. Commenting on the ease of doing business in the gem and jewelry industry in India, Pandya said, “I have asked the government of India to introduce a presumptive taxation system. We need to have clarity on the taxation system as this would not only help the local players, but also help us to approach the international players who are looking at doing business in India. Additionally, the interest carrying cost of inventory has to be reduced in line with international centers.” Pandya also came down heavily on the mixing of synthetic diamonds with natural diamonds. He reiterated the council’s efforts in pushing for diamond detecting machines at the Bharat Diamond Bourse (BDB), stating that with the increasing number of machines being installed, the time for detection would be reduced to three days from the current seven to eight days. Adding to this, he shared, “We are in a constant process to ensure that there is no disturbance to the flow of natural diamonds. With the ban imposed at BDB on companies dealing/trading synthetic diamonds, we have sent a strong message that mixing of synthetics will not be tolerated at all and anyone found guilty of doing this will face a serious action.”
Commenting on the current market dynamics, Vijay Jain, chief executive officer (CEO), Intergold Gems Pvt. Ltd., noted, “Overall demand continues to be both slow and sluggish. We have seen a shift from the larger stones — 1-carat-plus — to the .30 carats to .50 carats. We expect larger goods to pick up only when consumer sentiments improve. We are seeing an increase in fancies in North India. Across the market, we are seeing trading down, especially in the North, where people are moving down from SI1 and SI2 to SI3 and Is. While the South is predominantly a better goods market, we have seen an increase in VS goods take off from VVS. People also are moving down in color to I, J and K.” Elaborating further on the change in trends observed for this holiday season, Jain noted, “In terms of patterns or motifs, floral patterns dominated the trends in 2014 and continue to do the same this year as well. One noticeable change this year is an interplay of dual metal tones, i.e., the combination of white, yellow and rose gold, and platinum and rose gold. Gemstones like rubies and emeralds, despite being precious stones, continue to play a bigger role. Filigree is also gaining in popularity. In terms of settings, micro pavé and micro prong settings are doing well.”Article from the Rapaport Magazine - November 2015. To subscribe click here.
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