Rapaport Magazine


By Zainab Morbiwala
Market Moves in Right Direction

The 42-day protest by jewelers across India in opposition to the government’s proposed 1 percent tax on jewelry, which officially ended on April 13, prompted a response by the Gems and Jewellery Export Promotion Council (GJEPC). In an exclusive interview with Rapaport Magazine, Praveen Shankar Pandya, GJEPC chairman, shared that the organization plans to form a committee to examine how best to resolve the matter. While there has been no rollback of the tax, the government has issued assurances that no jeweler would be harassed by any authorities and the procedure would be simplified.

GJEPC Actions
   Pandya and his team have been having a round of meetings with the government to resolve issues being faced by the industry in India. On April 19, council members met in New Delhi with the appropriate ministers to talk about tax issues, gold availability and issues related to synthetic diamonds. According to Pandya, more meetings are expected to take place as the council has been very active in taking up the challenges faced by the industry and the government is taking a keen interest in resolving matters as much as possible.
   On a separate note, the government has decided to auction a diamond mine. The state of Madhya Pradesh plans to auction the Hatupur block in the Panna district. According to Balvinder Kumar, mines secretary, it will be auctioned this month, as reported by the Press Trust of India. Pandya commented, “Auctioning of the mine indicates that the government wants to put it in the hands of a private party to ensure it is managed more efficiently.”

Positive Demand
   While the 1 percent tax remains an ongoing issue, industry experts note that the market is improving, although not at the same rate as prior to 2008. According to Vipul Shah, director, Asian Star Jewels Pvt. Ltd., “January, February, March and April have been good compared to what the situation was post-Diwali in October 2015.” The market was very stable and it is moving in the right direction with comfortable inventory levels. “Compared to 2015, we have seen good sales taking place as well as profitability” Shah said, noting, “We have definitely witnessed good improvement in business-to-business (B2B) sales.” He added, “In the coming months, consumer sales across the globe will be important. The B2B sales have already taken place and now we have to see how the business-to-consumer (B2C) market behaves. If these sales are also strong, we are headed in a good direction.”
   Pandya pointed out, “With the U.S. taking the lead, I see a flurry of activities across the globe. We are witnessing a good demand this year.” Pandya noted, “The U.S. is already leading when we talk about diamond jewelry consumption but we are expecting it to move to the next level and become even stronger.” Elaborating that the global market is improving, Shah added, “Besides the U.S., Asia Pacific is showing good signs as well, especially China and Hong Kong.”
   On the current market dynamics, Mehul Choksi, chairman, Gitanjali Group, commented, “After two years of prolonged slowdown and price reduction in rough diamonds, since the beginning of 2016, we are witnessing positive growth.” Speaking specifically on the movement of goods, Choksi shared, “Anything above +11 sizes and dossiers up to 1 carat are moving very well due to less inventory. The demand is coming particularly from the U.S.” Although Choksi believes that over the past six months, manufacturers in India may have beefed up their inventory levels to meet the demand expected in the coming months.

Vegas Show
   All eyes are set on the Vegas show and the industry overall is upbeat in anticipation of booking new orders there. According to a press release by GJEPC, 60 Indian companies will be spread across 90 booths, at Bayside Level 1. Out of the 90 booths, 12 booths located at Diamond Plaza will have companies exclusively showcasing loose diamonds, and the other 78 booths located at the Passport section will have companies showcasing diamond and colored gemstone jewelry, loose colored gemstones and loose diamonds, as well as gold jewelry.
   There will also be an India Gallery, which will showcase products from the country’s leading jewelry makers known globally for their exquisite range of products that includes couture, designer, platinum, gold and silver jewelry.
   “Vegas is an important show for the diamond and jewelry industry,” Pandya noted. “Besides orders, the show is important for noting trends, both in diamonds and jewelry in general. This year, the show is all the more important as GJEPC will be making key decisions in Vegas in a meeting with the Diamond Producers Association (DPA) to discuss collaborative efforts to promote diamond jewelry. We are looking forward to associating ourselves with the DPA.” Pandya indicated there would be more specific details following the show.
   On a concluding note, Pandya shared some words of advice to the industry, “I would like to caution manufacturers not to be overly aggressive or take positions they cannot defend. We are still in the turbulent side, but on the positive side of the turbulence, so this needs to be kept in mind.”

Article from the Rapaport Magazine - May 2016. To subscribe click here.

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