Rapaport Magazine


By Zainab Morbiwala
Synthetics Challenge

It’s hard to believe but 2013 has almost come to a close and not much seems to have changed for the gems and jewelry industry in India except for the fact that the price of gold reached unprecedented heights this year and dropped to unbelievable levels as well. As for diamonds, the supply of rough and the price at which it is being sold in the market remain an issue as it has since 2008. In recent months, a new challenge has emerged with the growing popularity, as well as growing presence, of synthetic diamonds in the market.

The Issue of Synthetics
   Placing the current situation in context, Dinesh Navadia, president of Surat Diamond Association, told Rapaport Magazine that “The industry as a whole needs to come forward and deal with the issue of synthetics instead of just awaiting some action from the Gems and Jewellery Export Promotion Council (GJEPC) and the government. We need to understand that dealing in synthetics isn’t a profitable proposition. It is short-term gain. In fact, the very fact that a synthetic diamond needs so many certifications adds to the cost. And we need to keep in mind that in India we do not have labs to certify synthetic diamonds. The certification is all being carried out internationally, which means that as a country, we are losing money. This is why the government needs to intervene and impose a strict ban on the import of synthetic diamonds.”
   Vipul Shah, chairman of GJEPC, agreed with Navadia as to the seriousness of the synthetics threat. He said the council is moving aggressively to launch a Natural Diamond Research Centre at the Bharat Diamond Bourse (BDB), where diamonds can be brought in to be checked for their genuineness. “We have set up a Natural Diamond Monitoring Committee that is looking into the day-to-day affairs of natural diamonds coming into the country,” Shah told Rapaport Magazine. “If traders have any doubt about diamonds they receive from their associates, they can have the diamonds checked through the committee at the research centre. Also, we have appealed to all the industry players in India that if they learn of any company dealing in synthetic diamonds and selling them as naturally mined diamonds, then they should let us know. We will not only freeze their GJEPC membership but they will also cease to be a part of the Bharat Diamond Bourse and this will automatically lead them to lose their certification as a certified player in the industry.”

Synthetics Show Up
   It was earlier reported in The Times of India that diamantaires in India were reeling in shock after a large number of synthetic diamonds were recovered from diamond parcels sold to two big companies. According to the report, the sources in the market said that a Japanese client of a Diamond Trading Company (DTC) sightholder had sent back the diamond parcel after half of the stones were detected as synthetic.
   Similarly, a Mumbai-based company found approximately 50 percent of the stones in a parcel sold by a local trader were synthetic. An estimated 30 carats to 50 carats of synthetic diamonds were mixed with the parcels of original diamonds. The mixing of synthetic stones is mostly done in small-sized stones such as stars and melee. This type of diamond has a huge market in Japan, the U.S. and India.

Market Dynamics
   Despite the fact that the domestic market didn’t perform very well this Diwali, the industry is optimistic about the holiday season in the U.S. According to Navadia, orders start pouring in the first week of December. He and Shah agree that both the American and the European markets are showing positive signs of recovery and increased demand. “We are very much optimistic about this quarter in terms of export even though the domestic market isn’t doing too well,” commented Shah. “This is due to the price of gold and also an increase in the price of rough that is making polished more expensive and invariably leading to jewelry being priced higher than what people are expecting.”
   Kalpesh Vaghani, partner in Kapu Gems, agreed. “Q4 seems positive because we are getting inquiries from customers and they seem to be positive but all depends on how Christmas fares. If Christmas sales are encouraging, there will be a huge number of repeat sales.” Talking about the response during Diwali, Vaghani seemed a happy man, noting that “During the Diwali holidays, we sold a good number of stones from our website.”
   As far as the domestic market is concerned, Vaghani said flawless VVS and also some sizes in VS are moving well. In the international market, there is good movement for VS to SI, which is moving very fast, and there is good demand for VVS in many countries as well. In regard to cuts, Vaghani cited “round, princess, emerald and square emerald” as showing good movement.”
   On a parting note for 2013, Navadia said, “I would ask the industry to resist the temptation to buy rough at the price it is being sold in the market today. If they can do that and bring some control into their inventory management, 2014 shall reap benefits for them.”

Article from the Rapaport Magazine - December 2013. To subscribe click here.

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