RAPAPORT... Indian diamantaires are moving ahead with their plans to challenge the established rough distribution system by bypassing the usual suppliers and sourcing raw materials directly from mining companies on a collective basis. Approximately 1,500 small, medium and large Indian diamond merchants are floating a company under the name Surat Diamond Sourcing India Ltd. (SDSIL) to directly source rough in bulk and sell it to its members through a tender system. Initial plans call for all members associated with the new company to be equal stakeholders.
The initiative will help Surat assure a stable supply of rough for its manufacturing operations, increase its market share, qualify for volume discounts on the rough purchases and also eliminate brokers, further reducing its costs of accessing rough.
According to early announcements, SDSIL will have initial capitalization of $215 million and set up liaison offices in key mining countries, including Australia, Canada, South Africa, Botswana, Namibia, Tanzania and Zimbabwe. There are reportedly two categories of membership. Large manufacturers and rough dealers will contribute approximately $230,000 each to the effort and more than 1,000 small and medium manufacturers will contribute approximately $100,000 each.
Commenting on the new organization, Ashit Mehta, founding member, said, “The Zimbabwe government has a stockpile of $2 billion worth of rough diamonds and we want to purchase it all.” The collective has received complete support from India’s Gem and Jewellery Export Promotion Council (GJEPC), whose chairman, Vasant Mehta, said, “India, especially Surat, has grown to be the largest manufacturing center of diamonds. Due to large-scale investment requirements, diamond business houses have not so far entered into any mining contracts and are dependent on international trading centers for their supply of rough diamonds. A giant consortium such as SDSIL will help fulfill the industry demand for rough diamonds in a big way.” A website has been launched by the company at www.sdsil.com.
Recovery Picks Up
With the U.S. market showing positive signs of recovery, the Indian diamond industry is upbeat about the coming holiday season. For the first time in two years, imports of polished diamonds by the U.S. have exceeded the prerecession levels. According to official data, the U.S. imported polished diamonds worth $1.65 billion in July 2010, 35 percent higher year on year. During the first seven months of 2010, the U.S. imported polished diamonds worth $10.46 billion, 58 percent more than imports in the first seven months of 2009. Advertisements already have begun to appear for India’s own Diwali festival in an effort to lure customers to purchase gold and diamond jewelry for the holiday.
Recognition in Hong Kong
In another first for the Indian diamond industry, the country’s 103-booth exhibit at the September Hong Kong show was named “The Pavilion of the Year.” The award enhanced the exposure of the Indian country pavilion at the show in front of the global market and maximized the onsite show publicity for Indian exhibitors. Vasant Mehta said that “The Hong Kong show is essential for networking. Today, our diamonds are in demand across the world. Hong Kong does not just serve as an export destination, but also as a secondary source for Indian manufactured products. Over the years, the value of exports from India has seen a steady rise, with exports to the U.S. totaling almost $6.6 billion in 2009-10. We hope the trend continues.”
Marketing Initiatives
Shree Ramkrishna Exports (SRE) has launched The Design Canvas, an online application to help customers virtually sketch their diamond jewelry designs. The new initiative was introduced at the Hong Kong show by Roland Lorie, chief executive officer (CEO) of International Gemological Institute (IGI) Worldwide. This innovative service allows customers to custom-build jewelry items from concepts into reality. The technology is designed to enable the customer to see with proportional accuracy how a piece of custom jewelry will look on completion, to provide a base from which the design can be altered and refined and to determine a price estimate for the piece in advance of production.
In another marketing initiative, Tanishq from the house of the Tata Group launched Glam Gold 2010 through the World Gold Council (WGC), in association with AngloGold Ashanti. Sharing details about the new launch, Sangeeta Dewan, the head of the Tanishq Design Studio, said, “Glam Gold 2010 Collection is inspired by two distinct regional crafts — Gujarati rava work and Rajasthani meenakari — and fuses them together in a contemporary manner.” The new line will incorporate traditional Indian jewelry preferences for detailed gold work and elaborate enameling in modern designs.
The Marketplace
• Local trading is steady but sales are expected to rise leading up to the Diwali Festival November 5.
• Prices are stable overall. Demand is strong enough for inexpensive goods that they can command higher prices.
• The rough market remains strong and manufacturers are hoping for more goods and lower prices because of new rough supplies coming in from Russia and Zimbabwe.
Article from the Rapaport Magazine - October 2010. To subscribe click here.