21 Jul 2019
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India facing 'Margin' problem
Trade has remained on a low key with buyers' cold response to raise polished prices...
By: Administrator
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Jan 30 2009 2:47PM
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Reference: 2037  

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  • Market facing dicey situation
  • Industry headed for new awards night; Changes in award criteria
  • Panel on rough sourcing set up
  • Delegation to visit South Africa, Canada

Diamond trade has been passing through rough weather lately with narrowing margins and rising rough prices. Trade has remained on a low key with buyers' cold response to raise polished prices. Exports of cut and polished diamonds during April-July 2005 have been Rs. 11,734.27 crore registering a drop of 7.14% from Rs. 12636.96 crore compared with the corresponding period in 2004. The Indian diamonds industry has faced such market forces and emerged unscathed. "The industry is very strong. A year like this can come and go," said Bakul Mehta, Chairman of the Gem & Jewellery Export Promotion Council (GJEPC), during a brief interview with Mohana Ravindranath. Excerpts:

Business is willing-buyer and willing-seller. The rough prices have gone down, if you are not a willing buyer at that time, obviously the seller will bring down the prices. Same is the position of polished diamonds. In some areas of polished diamond we can command good prices and in some areas polished diamonds cannot command good prices. The industry is facing margin problem. The margin is shrinking. There is a lot of pressure on the margins. Polished price acceptability is not good at the moment. We will have to wait for the better. It's not that the Council can do much. The Council can generate demand. But with the oil prices soaring, the economic situation is such that under these circumstances I do not know how to see some good. I am not pessimistic but I am not optimistic either. At the beginning of the year it was different but I cannot say the same thing now. In this industry you sometimes have good years, sometimes slow year sand this is one of the slow years. The industry is very strong. A year like this can come and go. After a period of time things can change. November-December could be good. Even after 9/11 we did not expect much business but it was different and we did do good business. But now it is a dicey situation.

The demand has been better than what it used to be in the beginning of the year with more rough coming in from De Beers and the open market in Belgium. Diamantaires are in a better and comfortable position and so they are not Complaining as far as rough is concerned.

That is unlikely. During the last four months that is April-May-June-July, we have registered a growth of about 14% and 4% increase has been registered in the jewellery sector. I would have been more happy if it had been somewhere around 15 to 20%.

But it is usually during the second half of the year that more business takes place.

The commerce minister is making efforts to get diamonds from Angola however the rough diamond sale policy of Angola is well-defined. We are very open and we have some programs to go to the African countries and Angola will be included in the schedule. We have had talks with the new Ambassador from India to Angola about the needs of this industry for sourcing rough diamonds from that country in particular. I am sure he will look into the possibilities and help us.

A South African delegation recently came for on-the-spot study of how the Indian industry is working. They are in the process of evolving some policy framework for diamond sales in their country. They wanted to understand how the industry works here and what are the basic needs of this industry and how they can develop some cutting and polishing units of diamonds. Apart from that how they can work to add value to their rough diamonds. We will have to wait till they make some suggestions to their parliament and ministry. But the initial reaction was that they were impressed with the efforts that the GJEPC is putting in for the benefit of this industry and its members. We suggested that they may send some students and representatives to learn diamond cutting and polishing techniques which we can share with them. Talking about other delegations in the months ahead, we have some tentative proposals but nothing has crystallized so far. We are in contact with different countries. We intend to take delegations particularly to African countries and Canada later this year.

For the first time we have formed a committee which will be called Rough Sourcing Committee in which apart from the Council's office bearers, we will have trained members too. It will be a focused committee. They will come up with solutions from country to country. A team has been created for each country that can examine the policy. Every country has a different policy and we will have to evolve a different policy towards each country because what we can do in Russia we possibly cannot do in South Africa and what we would have to do in Ghana or Angola we would have to think and mould for others. So for every country we will have a different agenda, different action and that is why this committee has been formed. Thus we are expecting this committee to bring about concrete business oriented suggestions and not just policy suggestions to help in generating business.

Somewhere in November we propose to have the award ceremony. It would take place in Mumbai. For the last two years we have been deliberating on the issue and the award committee has come up with ideas with the help of the working committee members along with members of the trade and we propose to stage a different kind of award night. It's a very serious effort as we want to tell the world what these awards are about. It should be a strong message. There are some changes in the criteria but I cannot disclose the same right at the moment. The awards committee is working on the new ideas.

We will consider the refund policy. We have interacted with the trade members and participants. It is in the process of determination. We are considering all pros and cons.

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