India Market Report

RAPAPORT… The diamond industry in India has real reasons to cheer. In addition to the fact that the American economy is finally showing signs of revival, the domestic news also is good for Indian diamantaires. Consumer interest in the purchase of gems and jewelry has shown a remarkable upswing in spite of the rising price of gold. Both gold and diamond jewelry were proving popular with Indian consumers during the festive Diwali season.

In the month of October 2009, the major jewelry brands were booking maximum space in all the leading publications, both magazines and newspapers, to advertise their merchandise. Gitanjali, which has almost all of the major Bollywood actors signed on as brand ambassadors for its various Indian and international brands, is leading the race.

In addition to individual jewelry brands, the Gem and Jewelry Export Promotion Council (GJEPC) is actively promoting Anant, its most recent initiative. The lead sponsor for the jewelry collection is Rio Tinto. In a press statement, Jean-Marc Lieberherr, general manager for sales and marketing for Rio Tinto’s diamonds, said that “India is very well placed to reap the rewards of this program, given its historical diamond jewelry manufacturing capability and the driving role of GJEPC.”

In Focus – Surat
The visit to India by Paul Folmsbee, U.S. Consul General, was enthusiastically received by the industry, especially Surat diamantaires. As part of the visit, Folmsbee visited Sheetal Diamonds and Venus Jewels and also met with officials of the Southern Gujarat Chamber of Commerce and Industry (SGCCI).

Rohit Mehta, president of the Surat Diamond Association (SDA), expressed the hope of seeing the U.S. economy back on track by 2010 so as to enable Surat diamantaires to generate the volume of business with the U.S. they have done in the past. Historically, approximately 60 percent of Surat’s polished diamonds are exported to the U.S.

The SDA has asked Union Minister of Commerce and Industry Anand Sharma to consent to the establishment of a diamond trading hub in Surat, along with a diamond bourse. According to Mehta, this move will help place Surat on a par with other diamond trading hubs like Dubai and Antwerp.

The request is in line with the recent Foreign Trade Policy declared by Sharma, who assured the industry of government support to set up several diamond bourses in the country. India currently has only one diamond bourse, at Mumbai, which is still in a preliminary stage and not yet operating. As reported in expressindia.com, Mehta noted that diamond manufacturing units are already established in Surat and more than 500,000 people are working in the different diamond units as artisans.

“The small players in the industry have to purchase rough diamonds at higher rates from the big merchants here because the diamonds become more expensive passing through several layers,” Mehta was quoted as saying. “With a diamond trading hub in Surat, foreign companies would open outlets here and the local manufacturers would get diamonds at cheaper rates. Besides, domestic flights have also commenced from Surat.”

Keeping in mind the positive rise in demand for polished diamonds, Surat observed one of the shortest Diwali vacations — less than five days — in 2009. The diamond manufacturers are not in a position to close down their factories for more than five days.

According to Mehta, the Christmas buying season this year began in October and will continue until the end of November.

Market Dynamics
Commenting on the rise in sales of diamond jewelry in India, Gibson Vedamani, executive director of Kirtilal Kalidas Jewellers Pvt. Ltd., remarked, “It is good to see people indulging in diamond jewelry and not relying so much on the yellow metal, which dominated the market till now. Since 2008, I would say we have seen a healthy 10 percent increase in demand for diamond jewelry in the domestic market.” According to Vedamani, South India is the leading area of the country when it comes to the consumption of diamond jewelry.  

Recognizing the diamond industry’s “fire-fighting” abilities in times of distress, the Indian Institute of Management-Ahmedabad (IIM-A) has said that it is time for the business school to study the Indian diamond industry for the lessons of its rise, recession and recovery. According to a study conducted by IIM-A postdoctoral fellow Indu Rao, the initiative would make perfect sense considering the so-called “unorganized” diamond sector’s laudable resilience to bounce back, while corporate business and the world economy in general continue to struggle with the aftermath of recession.

The Marketplace

• The first two weeks of October were extremely busy in India with preDiwali holiday sales.
• The sudden weakening of the dollar against the rupee marginally affected sales.
• Demand is good for -2 and even better for stars.
• Overall demand is very strong for melee in lower piqué and SI+/J+ categories.
• Demand is very strong for goods priced under $300.
• 4-grainers are very hot and there are severe shortages in I+, VS+.