RAPAPORT... It comes as good news for the Indian gem and jewelry sector that the export figures for the fiscal year ending March 31 managed to show a positive growth pattern despite the slowdown in the U.S. economy and the growing strength of the rupee. The Gem and Jewellery Export Promotion Council (GJEPC), in a report on the performance of the Indian gem and jewelry industry for 2007/2008, said that the industry had grown by 22.27 percent in that 12-month period, for total exports of $20.88 billion, against $17.08 billion in the previous year. The sector accounted for 13.41 percent of India’s total merchandise exports.
OverviewSanjay Kothari, GJEPC chairman, stated that the growth should be credited to the increase in trading activities of Indian industry players and not to manufacturing as manufacturing, in fact, seems to have slowed down.
Exports of cut and polished diamonds are the performance driver for the industry, representing approximately 68 percent of total exports and increasing from $10.89 billion in 2006/2007 to $14.18 billion in 2007/2008. Among the importing nations, Hong Kong emerged as the largest importer of cut and polished diamonds from India with a share of 35 percent of total exports, followed by the U.S., which accounted for 24 percent and in third place, the United Arab Emirates (UAE) at 13 percent. Colored gemstone exports grew from $246.47 million in 2006/2007 to $276.42 million in 2007/2008. In metals, gold jewelry exports rose by 8.07 percent to $5.62 billion in 2007/2008, compared to $5.20 billion in 2006/2007.
Market Dynamics“The increase in Rapaport prices by 10 percent is difficult to digest and has had an impact on the industry,” commented Sachin Jain, sales executive, Excel Overseas. He suggested that the supply of rough is not a problem, but that it is the price rise that is restricting fair trade. “Within the past month or so, the price of rough has gone up by almost 10 percent. For rough, we deal with the Russian market and this price rise is causing a problem for us as we cannot demand the same price for our polished. Major markets for us would be Israel, the U.S. and Hong Kong. Only Hong Kong is presently giving us good business. The U.S. and Israel are not looking too positive and now, with the vacation season in Israel, the business will face a further hit.”
In terms of goods in demand, Kishore Pai, marketing executive, C. Mahendra Exports, said, “D to G is in demand in excellent cuts. Better-quality goods are also showing very good demand but because of the rise in the price of rough, it is difficult to meet the demand. Domestic demand for diamonds is showing a positive growth with South India showing the maximum consumption at present. Jain added that “Better-quality goods, collection goods in VVS and D to F and bigger sizes are in demand.”
Jain is of the opinion that, compared to 2007, the Indian diamond industry is performing much better because it has made an effort to adopt more global practices and reach out to more international clients.
Future InitiativesGJEPC is working to position Indian jewelry as the “Epitome of Luxury” by developing programs such as “Brand India” to promote Indian jewelry to the end users in markets such as the U.S., China, the Middle East, the Commonwealth of Independent States (CIS), Russia and in India’s own domestic market. In addition, the council has asked the International Diamond Manufacturers Association (IDMA) to prepare a report on the capacity of rough diamond mines worldwide and to assess the gap between the demand and supply of rough diamonds.
The Indian gem and jewelry industry welcomed the changes to the Indian government’s Foreign Trade Policy (FTP) announced by Minister of Commerce and Industry Kamal Nath in April. The changes provide certain concessions to exporters hit hard by the appreciation of the rupee versus the dollar and, according to the minister, should boost the creation of new jobs.
During a recent visit to Africa, an Indian delegation led by Minister of State Jairam Ramesh negotiated an agreement with Endiama, Angola’s state-owned diamond trading company, to facilitate the direct sale of diamonds to India by mid-2009.
The Marketplace• Indian manufacturers have raised their asking prices for polished goods. Severe shortages exist for SI+ goods across the board.
• Major liquidity problems are affecting transactions as suppliers cut back on long-term credit to buyers.
• Indian attendees restricted their buying activity at BaselWorld due to the high asking prices for white and fancy colored diamonds, even though substantial demand could have been fulfilled by the show inventory.
• Demand increased for -2 sieve but production is not sufficient to meet demand.
• Stars are stable, while melee goods are in very good demand, especially +8 sieve.
• Shortages exist for .08 to 0.18 carats, particularly for 1/6 and 1/10.
• Demand is very good across the board for 0.50 to 0.99 carats but in 0.80 to 0.99 carats, business is slowed by high asking prices.
• 1 carat+ is selling well across the board.
• Demand has improved for 2 carats in VS+/I+.
• 3 carats+ continue to be strong, with slightly better availability
Article from the Rapaport Magazine - May 2008. To subscribe click here.