The Diamond Trading Company (DTC) pruning of 11 Indian companies from its new list of sightholders occupied center stage for the Indian diamond industry in January. While the sightholders who have been shown the door will be forced to come up with new means to make up the losses, three other Indian companies found they had been added to the new sightholder list. As part of its efforts to protect the overall diamond community in India, the Gems and Jewellery Export Promotion Council (GJEPC) reportedly is asking DTC to revise or reconsider its decision on the 11 dropped sightholders.
Another matter of concern in the Indian market remains rupee appreciation, which has affected the overall exports market in India, with the diamond and textile industries most adversely impacted.
Industry SpeakReeling from the sightholder news and recent rupee movement, it is understandable that the industry players in India are not too bullish on diamond trade taking a positive turn in the months to come.
Girish Shah, partner, D.G. Exports, said “The holiday season was not as expected and exports have been hit, largely due to the American economy. The production in Surat has been affected as well because workers are on a longer holiday than usual because of the elections.” Vipesh Khadela, director, V.Krunal Enterprise, expressed a similar view. “Business from America is negligible at present and, as far as market development, we are looking at the Far East for better business.”
The dropping of the 11 sightholders will not affect the fact that “raw material still can be sourced from other markets, like Belgium,” said Shah, but he warned that “I anticipate an increase of 7 to 8 percent in the price of rough, which will invariably also lead to a price rise in polished goods.” Khadela anticipates a rise of 5 to 10 percent.
Market NewsThe hub of the Indian diamond industry — the Pancharatna building — has been going through rough waters since the New Year. The Indian income tax department has refused to recognize the Pancharatna building as a registered society and has asked the diamond market to pay approximately $1.27 million in income tax, including penalties and interest.
As reported in The Times of India, the national daily, GJEPC Chairman Sanjay Kothari is making a pitch for government aid, including cheaper loans and higher duty refunds, similar to those that have been awarded to other industries in India, such as textiles, handicrafts and leather.
The Surat diamond industry is also concerned about South Africa’s plans to amend certain laws governing the diamond mining industry, specifically restrictions on the exportation of rough diamonds. Such a change would lead to large mining firms being asked to divert a portion of their rough to polishing units in South Africa, which could in turn lead to a substantial drop in rough diamond making it to India.
The second edition of the premier B-to-B jewelry show of South India, the South India Jewellery Show (SIJS 2008), attracted more than 150 exhibitors. The show is designed to give the jewelry trade an opportunity to see first-hand the latest designs and jewelry production machinery and equipment.
News from RetailersFurthering their merger and acquisition spree, Gitanjali Group has acquired 100 percent of Nakshatra Diamonds from DTC for $25.4 million. This acquisition gives the group sole rights over the diamond jewelry brand, which they plan to expand to include other accessories such as shoes and handbags. In other acquisition news, Shrenuj and Company Ltd. announced its new 50 percent joint venture in the Arisia Solitaire brand, also from DTC. Like Gitanjali, Shrenuj, too, is planning to enhance the brand’s product portfolio and make Arisia a global luxury brand. Increasing its export portfolio, Rajesh Exports recently launched a range of diamond jewelry brands.
The Marketplace • The local market has been extremely cautious since the beginning of 2008 because of financial failures. In addition, the loss of sightholdership for some Indian companies has led to uncertainty.
• Overall trading of polished goods is
stable, mainly due to demand for small goods under 0.18 carats from Indian buyers based in Antwerp.
• Severe shortages persist for rough and polished goods, some of which are occurring because Surat manufacturing units are still not fully operational.
• Prices are steadily increasing for polished goods and sellers are holding on to their inventory to gain maximum price benefit.
• -2 and melee category is doing very well because of good demand with severe shortages.
• Stars and 0.08 to 0.18 carats are
comparatively slow.
• Demand is good for 1/5, 1/4 and 1/3 category in I1 and I2, with SI1+ picking up movement.
• Halves are in good demand, with
discounts narrowed by 1 to 3 percent for VS2+ goods. Demand is also improved for SI goods.
• 0.70 to 0.99 carats are stable overall, with shortages persisting for 0.80 carats and discounts narrowed by 2 to 3 percent for VS+ goods.
• Demand is excellent for 1-carat, very high-quality goods.
• Demand is improved for 2-carat
collection goods.
• Severe shortages persist for 3 carats and demand remains excellent across the board.
Article from the Rapaport Magazine - February 2008. To subscribe click here.