India: stars and melees still running the show

Aruna Gaitonde

Trading in the diamond market was quite brisk in August, with overseas buyers making their trip for their purchases; and the domestic buyers stocking up for the same reason and more…wedding season! Though polished prices were not what the sellers expected, business had to go on, as inventory had to be cleared. Some price haggling was happening even with lower end goods that were in high demand. High-end stones, good makes were short of supply in the market.

With the response at the Hong Show rather subdued, the normal excitement was missing post the show. But, stars and melees still running the show with good demand. Caraters were in demand, but more from the domestic sector rather than from overseas’ buyers. There was not much of trading in the rough diamond though, as again those who indulged in panic buying at high costs were downloading, to meet liquidity constraints.

The month of August was a repeat of the previous months as far as the Indian diamond industry’s performance was concerned. The downslide continued with polished exports going down 8.4% and rough imports too going down by 22%. According to the provisional figures announced by the Gem & Jewellery Export Promotion Council (GJEPC) of India, cut and polished exports for Aug. ’15 declined by 8.43 percent recording $ 1755.46 million as against $ 1917.17 million in Aug. ’14. Rough imports recorded $ 609.80 million for Aug. ’15 as against $ 782.54 million in Aug.’14, registering a decline of 22 percent. Rough exports showed a decline of 23.76 percent, registering $ 88.23 million for Aug. ’15 as against $ 115.73 million for Aug.’14. Polished diamond imports recorded $ 241.26 million for Aug. ‘15 as against $ 511.50 million for July ‘14, showing a decrease of 52.83 percent, which of course augured well for the cutting centres.

However, the recently released 2014 Annual Global Summary report of the Kimberley Process Certification Scheme, in which the recent production and import-export of rough figures were announced, shows that while India continues to be the largest direct importer of rough with a 37.5% share of global rough imports. India is much ahead of the European Union, second placed importer in terms of volume, with the latter having a 29% share in global imports, but the gap is narrower in terms of value, with India’s $17.2 billion or 30.4% share being slightly ahead of the EU’s $15.8 billion or 27.9% share of global imports – an indication that India is still on a strong footing.

As mentioned in these columns repeatedly, the Indian diamond industry is a resilient and complex industry. It has overcome many hurdles over the decades and is strong enough to face many more, if need be.  The report ‘Diamond Insight Report 2015’ by De Beers too accepts it in its report, which says that driven by a widening consumer base, economic development and increasing volumes, India’s diamond consumer market has achieved almost uninterrupted growth over last 20 years. It is now one of the world’s largest consumer markets and retail landscape is changing in India.

Global diamond jewellery demand rose 3% to exceed $80 billion for the first time in 2014 – representing the 5th year of consecutive growth since the global recession – while global rough diamond production rose 6% to $19 billion. According to the report, rough diamond demand is likely to be lower in 2015 as higher levels of stock in the midstream and downstream work through the system

A news that gave the much needed confidence and impetus to the diamond industry is about market leader KGK Group going ahead to open the cutting and polishing factory as planned in Gaborone, Botswana recently — showing the strength of a well-run business Group.

The cutting centre Surat was in the news during the month as production was interrupted by the Patidar rally. In another news, the Gujarat Hira Bourse (GHB) project in Surat was denotified as a Special Economic Zone (SEZ) according to a decision taken by the Ministry of Commerce, Government of India.

For many years now, the mining sector in India has made no major progress. Despite having good geological prospectivity, the exploration spend in India is abysmally low, said Noor Ahmed, president, Federation of Indian Mineral Industries (FIMI). “India figures nowhere in the global exploration budget,” said Ahmed, in his welcome address at FIMI’s ‘Mining Mazma’ — a three-day mining exploration convention and trade show. FIMI also wanted attractive policy to encourage private investment and expertise.

Finally, the Metals and Minerals Trading Corporation of India (MMTC), under the Indian Union commerce ministry, will manufacture and market sovereign gold coins in India and abroad. “We have been given the responsibility. Finance minister Arun Jaitley had announced about the issue of these gold coins in his Budget speech in February,” said MMTC chairman and managing director Ved Prakash.

According to ICRA, the rating agent agency of India, India’s gold imports may fall 5% in next 12-18 months due to the proposed launch of Gold Bond Scheme (GBS) and Gold Monetisation Scheme (GMS) by the government of India.

Not surprisingly, Gold was in the news throughout the month of Aug. showing that Indian refiners are now importing more of gold dore from Latin America and North Africa, which has a gold content of 92-96 per cent and attracts an import duty of 8 per cent. This makes importing gold bars from Dubai (that attracts a 10 per cent import duty) not as lucrative and may take a hit. Refining of gold dore has increased significantly in recent months in India. Industry officials said that several refiners are either exploring the possibility of opening new facilities or are resuming the existing facilities. According to industry sources, refining will increase in the next three to four months – during the festive season in India.

Gold news again, when the Indian government announced that it would auction licenses for new gold mines and abandoned colonial-era mines are set to be revived. Successive governments have struggled to turn Indians away from gold, which economists say accounts for almost a third of the country’s deficit. Now ministers want to increase domestic supply and believe gold worth more than £2.5bn can be mined in the dusty hills of Kolar, in the southern Indian state of Karnataka, with more to come from other sites in the west and centre of the country.

Another announcement from the Indian government said that it may offer 2% interest on gold deposits under its Gold monetisation scheme. As regards the sovereign gold bond scheme, the government aims to raise $ 2261 million; and the timing of the launch will be decided in consultations with the Reserve Bank of India.

G.V. Sreedhar has been unanimously elected as the new chairman of the All India Gems and Jewellery Trade Federation (GJF). He was nominated at the Committee of Administration meeting in Mumbai. Sreedhar has been closely associated with the GJF as vice chairman as well as GJF member since it was first founded and has actively participated in its numerous programs and initiatives. Sreedhar was also the former president of numerous renowned associations in Bengaluru.

Not just organisations, but Indian companies are also into research to identify synthetic diamonds. DRC Techno, the Dharmanandan Research Centre recently has introduced an instrument to aid in the identification of synthetic diamonds. D-Secure, the new instrument, is unique in that it can be used to check rough and polished diamonds; as well as stones set in jewellery, which are “exposed” and “visible”. It detects ‘all sizes from 0.003 cts (+0000 Sieve size) to 10 cts of colourless or near colourless diamonds; and detection of bigger than 10cts is also possible with some mechanical add-ons.’  The instrument is also able to check the stones in batches. While the instrument is able to assess any shape, for small (below +11) fancy shapes a replaceable attachment is required.

According to DRC Techno, with the instrument no further testing is required and results can be obtained on the spot. Explaining the reasoning behind developing the D-Secure, the company said: “Most of the identification tools or instruments available in the market are either very costly or limited to some sizes, shapes, speed, accuracy or the instrument’s availability to specific clientele. Mostly instruments are only limited to identify TYPE – IIa which required further testing in Lab. It requires lots of time and energy to make sure that what they have purchased is full proof. After years of research of these perennial issues, we consolidate the solution in one single instrument – ‘D-Secure’.”

The Indian domestic market was in a preparation mode for the festive season, which was round the corner. Retailers were stocking up with jewellery of all kinds and designs …diamond studded, coloured-stone studded, plain gold, ethnic heavy sets for the marriage season and so on and so forth. Excitement has already caught up and retailers are looking out for a good season this time round. Offers, discounts etc are also being offered by the retailers to woo the discerning customers. Online jewellery companies are ‘making a killing’ too with their many ‘offers’ like discounts, convenience etc. On the whole, it looks like an average Indian domestic jeweller will go ‘laughing to the bank’ this festival season.

Source Rough & Polished