By Priyanka Dey
Edited by Namrata Caleb, Senior Editor, The Indian Economist
India’s rough diamond imports (in carats) increased in terms of both carats and monetary value from 11,658,000 carats of diamonds worth US$1,373.16 million in June 2013 to 12,994,000 carats of diamonds worth US$1,595.51 million in June 2014 as per statistical announcements of India’s Gem & Jewellery Export Promotion Council (GJEPC). The country’s rough diamond exports in June 2014 was stable from June 2013, at nearly 2.7 million carats worth US$111 million in June 2014. India’s rough diamond export increased in monetary terms while recording a decrease in carat terms. India’s cut and polished diamond imports however decreased to 1,166,000 carats in June 2014, from 1,874,000 carats a year earlier. In terms of value, cut and polished diamond imports decreased to US$662.15 million in June 2014 from US$695.31 million in June 2013. As per the predictions of India’s Gem & Jewellery Export Promotion Council (GJEPC) 2012 was a slack year for India’s diamond export. With a global presence of Indian diamond in all major international markets, sloppy market is to be blamed for the negative growth. Diamonds being expensive, the luxury to buy diamonds are easily offset by exchange rate fluctuations.
Despite the slackness of trade with traditional partners USA and Europe, the Indian diamond merchants were very positive about the quick revival of market due to the presence of emerging trade avenues in the neighbouring countries. It is highly expected that political calmness with Pakistan will lead to MFN deal closure and will help increasing international dependency through trade. It is expected that Pakistan will give India Most-Favoured Nation (MFN) status by this year end, thereby boosting the trade sentiment between the two nations. Indian diamonds are exported to Dubai and from where it reaches Pakistan. India exports substantial share of its entire diamond exports to Middle East countries. As per the data provided by the Dubai Customs, Dubai imported about US $ 9.5 billion worth of goods from India during the first six months of 2012. A large part of these imports comprise of diamonds, jewellery, electronic devices and mineral oils. The biggest polishing and cutting centre of diamonds Surat merchants have shown high interest in expanding their business in international market .The easy prey is Pakistan , as the trade outflow for diamonds both cut and uncut are huge . Indian businessman sees Pakistan as a vital trade expansion measure. The Indian delegation from the gems and jewellery industry led by the Gems and Jewellery Export Promotion Council (GJEPC) crossed the Wagah border in June 2012 to participate in the Pakistan International Gems and Jewellery Exhibition, a four-day show organised by Pakistan Gems and Jewellery Development Company (PGJDC) in Karachi for the first time. This event marked a spot in bilateral trade initiative between India and Pakistan. The uniqueness of Pakistan’s 10 Billion $ diamond market is similar in taste and preferences. The cultural togetherness provides leverage to understand seasonal fluctuations in market. The taste of jewellery is also very much similar in both the countries making Indian products a step forward in comparison to the counterparts.
Considering that the official figures are only regarding the formal trade of the diamond industry the unobserved informal channel of trade claims to be 15- 20 times bigger in operation. Informality has gained trust and value of word of mouth has led to a strong web of trade. It is one of the ancient trade facilitation that preserves values, morals and traditional ways of trading. Little is known about the Angelia’s.
Diamond as an investment asset is also picking up the craze. I’d like to see diamonds as a more mature and understanding investment product than shares or bonds. It does not only provide value for time but also value for ageing. The exclusivity of possessing a rare piece of art as discussed by me in “Returns from Art “describes the formulation of this idea. Since July last, when the price of gold saw an all-time high of Rs 33,500 per 10 grams in the Mumbai market, the metal has failed its return by 10% to about Rs 30,000 now. Whereas the price of diamond as measured by Solitaire Diamond, a leading player in the market, has gone up by over 10% for most of the good quality diamonds. In India, gold import attracts import duty, importing rough diamond does not attract any duty. But India polishes most of world’s diamonds, so the extra incidence of import duty will not fall on an Indian interested in investing in diamond.
In ambiguity of political ‘Aache dine aane wale hain “we must agree that a little initiation can really make diamond market’s Aache din come soon.