RAPAPORT... With things still looking gloomy for the diamond industry globally, India has no reasons to cheer. But there is hushed speculation that some recovery could begin by mid-June. The price of gold has been on an upward swing in recent months and, except for a marginal decline that lasted only a few days, has not fallen much off its $300-per-10- grams mark. The price rise has not only caused a standstill in the movement of gold but it also has led many consumers to sell their existing gold jewelry and coins to cash in on the high prices.
People in the industry say gold prices could impact the Basel show as well. Ajay Gehani from Sovereign Jewellery Ltd. observed that “I do not know how successful the Basel show is going to be, with gold rising so much. It reminds me of the Basel show in 2008 when the same thing happened — gold shot up three days prior to the show.”
Task ForceThe Reserve Bank of India (RBI), the country’s central bank, appointed a task force to recommend strategies for the future of the diamond industry. Specific attention was paid to Gujarat, the country’s hard-hit manufacturing center. The suggestions contained in the final report by the task force include a series of loans to be extended by banks to the manufacturing facilities, with diamond inventory used as collateral, and a fast-tracked restructuring for firms with credit problems. In an attempt to aid the workers, the task force suggested making new business loans available to displaced workers, restructuring the loan terms on outstanding debt for unemployed workers and establishing programs to train diamond workers for jobs in other industries.
One task force recommendation that is of concern to diamond workers requires registered diamond units to submit lists of their employees to the state Labour Department for the issuance of identification cards to the workers.
The concern is that the workers in the unorganized units, which are not registered and which operate under the radar of government licensing and supervisory bodies, will not be able to avail themselves of any of the benefits of the new laws.
Business Standard, a daily English-language Indian business newspaper, reported that the task force also suggested that banks finance rough diamond purchases to generate jobs. The problem is that with an excess of polished diamonds in the pipeline — and limited sales going on — the banks’ involvement may simply add to an already difficult situation rather than alleviate it. The task force has justified this recommendation by stating that many polishing units operate as outsourcing facilities. They polish goods but do not purchase the rough and usually do not use bank financing.
IIJS Signature FeedbackParticipants had a mixed reaction to the IIJS Signature Goa show. Niraj Menda from the Lakhi Group was not disappointed with the show, noting the impact of the recession. Reena Kapadia from Jewelex felt otherwise. He observed that “Considering the market condition, IIJS managed to put up a good show. We cannot blame them if the response was not very good. I have no complaints. I really think GJEPC (Gems and Jewellery Export Promotion Council) should go ahead and have this show every year. Unlike the IIJS show in Mumbai, IIJS Signature is an invitation-only event in which select participants showcase offerings that meet international standards. So here, we get a chance to go out and show the world what India is capable of.”
Gehani shared that “Honestly, IIJS Signature was good for us. Internationally, there were mainly Eastern European clients. We have received orders from about five or six clients and two of them even visited the factory after the show to order more.”
IIJS Signature 2009 hosted close to 1,000 visitors, 250 from abroad and 750 from India and featured approximately 100 exhibitors. Additionally, the show hosted ten trade delegations from China, Syria, Uzbekistan, Hungary, Azerbaijan, Poland, United Arab Emirates (UAE), Russia, Iran and Ukraine.
Speaking at the opening ceremony of the show, Digamber Kamat, chief minister of Goa, congratulated GJEPC “for making the bold decision to go ahead with the exhibition despite the recession. This to me shows the gems and jewelry industry’s keenness to come out of the recession.”
Other DevelopmentsIn addition to getting the attention of the task force from RBI, the Gujarat diamond industry also had a group of German visitors assessing their situation. The team of 28 students, three researchers and faculty members from Martin Luther University of Halle-Wittenburg traveled to Surat to prepare a report on the plight of the diamond workers in the area. The entire project was reportedly funded by the German government.
In Mumbai, Vardhman Group recently opened Jewel World, India’s first mall dedicated exclusively to jewelry. Spread across 80,000 square feet, the mall is located at Zaveri Bazaar in south Mumbai.
The Marketplace• There is no movement in SI goods and there is excess supply.
• Lower-quality goods are not moving at all.
• Internationally, higher-quality goods, still in short supply, are in demand.
• Solitaires are selling in the Caribbean.
• Demand in the United Arab Emirates (UAE) and South Africa is split 30 percent for colored diamond jewelry vs. 70 percent for white diamonds.
• Internationally, demand for baguette and princess cuts in diamonds has slowed since December-January.
• Jewelry orders are coming in from Switzerland, Austria, Germany and Belgium.
Article from the Rapaport Magazine - April 2009. To subscribe click here.