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GJEPC Warns Low Profit Margins Threaten Surat's Factories

Rupee Slumps to Record Low

Jun 20, 2013 1:25 PM   By Avi Krawitz
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RAPAPORT... India’s Gem & Jewellery Export Promotion Council (GJEPC) warned that Surat factories will soon start closing if manufacturing profit margins don’t improve.

Anup Zaveri, a member of the GJEPC’s committee of administration, urged the industry to ensure the profitability of not only the indigenous mining countries, but the entire pipeline.  Speaking at the Angolan diamond centenary conference on Thursday, Zaveri estimated that rough prices have increased by an average 12 percent so far in 2013, while polished prices have been out of step, even by global inflation.

“This situation cannot continue,” Zaveri said. “Surat factories are losing money and it will not be long before they start to close.”

Already, manufacturers report that factories are downsizing their operations. One large Surat-based manufacturer told Rapaport News recently that cutters are frustrated that there has been no profit at the manufacturing level.

Indian cutters supplying goods to the domestic market have been further impacted by the recent sharp depreciation of the rupee against the U.S. dollar. The rupee hit a record low of 59.9/$1 on Thursday and has now declined by more than 8 percent in the current quarter.

While the weak rupee doesn’t affect diamond exporters, who buy their rough and sell their polished in dollars, cutters noted that it significantly impacts those who manufacture small goods as these are predominantly sold in rupee to the domestic market.

Still, India continues to seek new avenues to procure rough diamonds from the direct source. Zaveri noted at the conference that India imports very few rough diamonds directly from Angola and thus there exists a perfect fit for increasing rough trade given that India is the largest manufacturing center.
Tags: Avi Krawitz, diamonds, GJEPC, India, Rapaport, Rupee, Surat
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