India’s Gem & Jewellery (G&J) sector may have witnessed an average performance during 2014-15 but with the country’s strong economic fundamentals and improved infrastructures, it is surely going to regain the sector’s lost shine during 2016.
India’s G&J sector had suffered a lot because of the two consecutive poor monsoons and sluggish economy of certain key nations. Gem & jewellery exports from India during April-Oct 2015 fell by 3.43% to USD 25.90 billion. The decline in the diamond and jewellery export sectors has been more severe at 14.41% and 21.01% respectively. Imports for the year to date were down 27.2% with a direct impact on prices. Indian companies buy about 85-90% of the world’s rough diamonds by volume.
Work in Surat has also been affected due to slow demand and down-turn of global economy. The city witnessed a few bankruptcies, more than a few closures, and big numbers of layoffs. Even those companies which are running are said to have reduced working hours and wages to avoid job losses.
From global perspective also, 2015 was a turbulent year for the rough-diamond market. According to a report released by Bain & Company, rough diamond revenues grew by 8% last year on the strength of increased sales by the top five diamond producers in spite of a decline in the overall volume of carats mined. During that same period, rough-diamond production volume fell by 4% globally to slightly less than 125 million carats, with the largest drops occurring in Australia and Africa.
The recently published report stresses that cutting and polishing revenue continued its positive trajectory last year with growth in the mid-single digits, owed majorly to India and China. Both the countries together make up about 80% of the market, while Africa’s cutting and polishing market declined drastically. Belgium, Israel and the U.S., which focus on high-end stones, recorded decline in polished revenues with volumes of large-sized rough stones migrated to India. India now cuts and polishes more than 40% of the world’s diamonds larger than 1 carat with quality standards comparable to those of developed markets.
Moody’s reports that prices of rough fell by 18% since the beginning of 2015 while Bain & Co. says that there has been a decline of nearly 23% since mid-2014. But both analyst companies believe that further cuts will be required to restore equilibrium in the pipeline.
The year 2015 in the end has proved quite hopeful for India’s G&J sector with inauguration of the India Diamond Trading Centre (IDTC), a historical initiative jointly taken by India’s Gem & Jewellery Export Promotion Council (GJEPC) and Bharat Diamond Bourse (BDB). The launch of SNZ faculty at IDTC in Mumbai would further enhance diamond trade & help India in becoming global diamond trading hub. This will be great help to small & medium traders. With this added and improved infrastructure, India can expect brighter future for its G&J sector.
Ms. Ali Pastorini, Vice President of the World Jewelry Hub (WJH) and Senior Vice President of the Panama Diamond Exchange has also predicted bright prospective for G&J sector. In one of her articles published in gems2jewellery.com, she says, “The sluggishness in the Indian and Chinese markets during 2015 has caused a great deal of concern, but we should remember that the fundamentals of the market in those countries have remained sound. They will survive and prosper, quite possibly during 2016, and will be joined by other developing markets, like those in Latin America.”
“As industry leaders our responsibility is to stimulate confidence among our constituents, and to provide them with the tools and environment in which their businesses can prosper. We can do that in 2016 if we remain strong, smart and united,” she adds.
Posted by Suresh Chotai
