Indian committee focuses on challenges facing diamond industry
MUMBAI, September 26, 2013 – India’s Gem and Jewellery Export Promotion Council, (GJEPC) along with leading primary sources and prominent industry representative including DTC sightholders, Rio Tinto and other important diamantaires, held a meeting at the Council’s office in Mumbai on September 23, 2013.
The meeting focused on the issues that are currently being faced by the manufacturers of rough diamonds and the ways and means to address them effectively.
Based on concerns raised by its members during informal interactions, GJEPC has recently formed a Trade Advisory Committee with prominent diamond manufacturers and exporters to equip and allow for better understanding and develop an appropriate response to the challenges faced in cutting and polishing of rough diamonds, that have been recently affecting the profitability and overall growth and business prospects of the industry.
Speaking about the meeting, Vipul Shah, Chairman, GJEPC said, “Rising prices of rough, currency fluctuations and limited finance options with banks having become very stringent on financing, have recently had severe impact on the diamond businesses.
“This phenomenon has assumed critical proportions calling for austerity measures amongst the trade fraternity with the view to balance the equation between manufacturing and exports.
“We are hoping that by gathering inputs from the various trade and industry partners, we will be able to develop strategic solutions that will enable the diamantaires to deal with the current crisis, set out short term and long term goals and thereby steer the industry to growth and prosperity in the years ahead.”
Feedback from big and medium-sized diamond manufacturers indicated that sustained absence of profitability of cut and polished diamonds is a major concern.
The industry has been severely affected by high rough diamond prices that are being maintained by primary producers through 2012 and 2013, liquidity pressures from rupee volatility, as well as slowdown in demand.
On an encouraging note, most manufacturers said that they have already reacted proactively to such challenges by reducing their production over the last quarter.
Furthermore, it was understood from the discussion with them that production over the next 3 months is expected to be 30-50% below normally prevalent levels at this time of the year.
This will ensure that the industry manages its inventory levels optimally which does not exacerbate the liquidity concerns.
Manufacturers have also indicated that such voluntary production cuts might continue, and even intensify in 2014, if they do not see a return of sustained profitability in polishing of rough diamonds.
It may be noted that the industry had jointly and voluntarily decided to stop rough imports for a brief period of time in 2008, owing to the downturn and financial crisis.
The GJEPC urges all industry stakeholders to conduct their businesses responsibly in the current scenario and ensure that their actions do not precipitate any long-term damage to the diamond industry in India.
GJEPC said that responsible action by stakeholders can help the Indian industry to sustain and grow the employment opportunities in this sector, as rough production is estimated to increase over the next 3-5 years.
GJEPC assured trade members that the Council would continue to monitor the situation closely through the Trade Advisory Committee and its members.
It was felt that the current scenario did not warrant taking any further steps as yet, besides those already taken by members.