Import of rough diamonds unlikely to resume soon

KOLKATA: Diamond-polishing units in Surat are starting to re-open, although manufacturers might need to wait until late fall for sparkle to return to an industry that largely depends on festive purchases in the richer neighbourhoods of the European Union, the UK, the US, China, Hong Kong and Dubai.
Due to muted global demand, Indian diamond trade is unlikely to import rough diamonds for a month beginning June 1, as the global demand will not pick up immediately and the trade has huge inventory.

But India is set to retain its traditional dominance in these markets, contrary to perceptions of a section of the diamond miners that curtailing rough diamond import by Indian diamond trade may affect global supply chain of polished diamonds and China may grab a share of Surat’s rough diamond cutting and polishing business. India cuts and polishes 14 out of 15 diamonds produced in the world.

With the US being the biggest buyer of Indian-polished stones, the chances of China don’t appear too bright amid the ongoing trade skirmishes between the world’s two biggest economies.

Washington has already imposed a 10% duty on Chinese-made jewellery. Traders also believe it is difficult for potential rivals to replicate India’s success in cutting and polishing small diamonds. Enough stock would, however, ensure that India may not import rough stones immediately.

“Diamonds are a discretionary product, and as lockdowns are eased, we expect consumers to first focus on essentials, with record unemployment and closures affect their incomes,” said Colin Shah, vice-chairman, Gem & Jewellery Export Promotion Council (GJEPC).

“All the studies show that we can expect recovery toward the end of 2020. Diamond purchases would be expected to pick up only after 2-3 months.”

India’s diamond manufacturers had about 1-2 months’ of rough supply when the restrictions were put in place.