There’s a handful of Indian and Belgian buyers who are snapping up large volumes at lucrative terms, getting to pick and choose the diamonds they need while others stay away.
The China lockdown and Beijing’s zero-Covid policy have started to impact India’s exports of cut and polished diamonds, which fell for the first time this fiscal year in July. Exports of these stones fell 13.45% from a year earlier to $1,933.32 million in July, as demand was muted from China, the second largest buyer of India’s cut and polished diamonds after the US.
Exports of polished lab-grown diamonds may double in the current financial year started April 1 from $1.3 billion in the prior year, Vipul Shah, vice chairman of the Gem & Jewellery Export Promotion Council, said in an interview. “We have a huge potential to grow exports to $7 billion-$8 billion in the next few years on the back of US demand and acceptability in the UK and Australia,” he said.
Exports of polished lab-grown diamonds may double in the current financial year started April 1 from $1.3 billion in the prior year, Vipul Shah, vice chairman of the Gem & Jewellery Export Promotion Council, said in an interview. “We have a huge potential to grow exports to $7 billion-$8 billion in the next few years on the back of US demand and acceptability in the UK and Australia,” he said.
Reflecting the slow shift in the diamond trade, the decision by the country's largest bank comes amid some of the jewellers putting up factories in Surat to produce synthetic diamonds and many diamond houses considering relocating from the financial capital Mumbai to the southern Gujarat town, which for decades has been the hub of diamond cutters and polishers.
The 170 carat pink diamond was discovered at the Lulo mine in Angola's diamond-rich northeastern region. It's one of the rarest kinds.
Surge in Covid-19 cases has led to lockdowns in several regions in China, which is one of the largest consumers of Indian polished diamonds. Additionally, inflation and opening up of other avenues of discretionary spending, such as travel and hospitality, will dampen demand growth in the US and Europe in the near term.
Gem and Jewellery Export Promotion Council (GJEPC), the apex body of gem and jewellery trade in India, through a series of representations, had been seeking GST increase on cut & polished diamonds to 1.5%, GST decrease on grading and certification (GCS) to 1.5%, refund of accumulated ITC, etc.
Russian mining giants like Alrosa traditionally accounted for over a third of India's rough diamonds, but supply has all but stopped because of Western sanctions.
Gold jewellery exports (plain and studded jewellery) in May jumped 50.11 per cent to Rs 5,273.40 crore (USD 681.47 million), compared to Rs 3,513.08 crore (USD 479.54 million) in May 2021, according to the data. Silver jewellery exports during April-May 2022 witnessed a decline of 6.63 per cent to Rs 3,728.84 crore (USD 485.41 million), compared to Rs 3,993.64 crore (USD 540.19 million) during April-May 2021.
Exports of lab-grown diamonds have increased by 108.27 per cent in FY22 as compared to FY21. The diamond trade has also urged the commerce minister to bring lab-grown diamond under PLI (production-linked incentive) scheme as it has an export potential of Rs 40,000 crore within next five years.
Working hours have been reduced to eight hours from 12 and units have declared two days off weekly, which is having a bearing on the wages of 800,000-1 million workers engaged in cutting and polishing. Diamantaires have cut production as the supply of roughs from Russia has fallen.
The sweeping economic sanctions on Russia also covers Alrosa, the biggest Russian diamond miner that meets as much as 30 per cent of global production of roughs, and this will have a bearing on the domestic diamond polishing industry, aid the report bases on the analysis of 53 diamantaires, which contribute a third of the industry revenue.
The sanctions have severed Russia’s central bank and two major banks from the SWIFT system. While they do not prohibit business with Alrosa, trade settlement has become difficult, which could lead to supply disruptions.
The Budget 2022 has paved the road for the sector to grow and expand India's footprint in the global gem and jewellery trade," the minister said.
Prices of other gemstone-studded jewellery, too, are expected to come down due to a proposed duty cut on polished natural gemstones.
Simultaneously, the move will also increase exports of diamond studded jewellery India. Exports of gem and jewellery from India have already crossed the pre-pandemic level and it will get a fresh fillip due to the government’s decision to bring down duty on cut and polished diamonds from 7 per cent to 5 per cent.
Presenting the Budget for 2022-23 in the Lok Sabha, Sitharaman also announced that the government will facilitate export of jewellery through e-commerce for which it will implement a "simplified regulatory framework" by June this year.
Provisional gross export of silver jewellery for the period April-November 2021 showed a growth of 20.47 per cent at Rs 12,552.39 crore (USD 1,691.86 million) against Rs 10,419.33 crore (USD 1,400.04 million) in the same period of previous year.
Cut and polished diamonds are a major revenue earner for India. The overall gross exports of cut and polished diamonds stood at ₹91,489.2 crore in the April-September period, up 122.62% from the year earlier.
China's economic growth is losing steam under pressure from a construction slowdown and power shortages, prompting warnings about a possible shock to its trading partners and global financial markets.
The shortage comes at a time when domestic diamond exporters were looking forward to the holiday season since the recently concluded jewellery show at Las Vegas signalled good demand.
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